Macrotech Developers Ltd. prepares to raise Rs 2500 crores from IPO activity, has set the price band at Rs 483-486. In terms of valuation, it is the second-largest from an Indian real estate firm.
Macrotech Developers, formerly known as Lodha Developers, is one of the critical players residential and commercial property development segment. The Mumbai-based realtor was the largest in residential property sales in 2017.
Through the IPO, the issuer is aiming to reduce its existing debt burden. The success of the IPO offer is essential to pare its total debt of Rs 186.6 billion. The company has decided to use Rs 1500 crore from the IPO to trim its existing debt burden.
It is the third attempt from the realtor to launch an IPO. Initially, it targeted IPO twice in 2009 and 2018 but shelved because of unfavourable market conditions. It is the second-largest offer from a real estate developer since DLF in 2007. However, DLF’s shares have lost half their value since.
Macrotech IPO: Should you subscribe?
The realtor is currently under massive debt, aiming to reduce through raising capital from the market. However, it also reported receiving Rs 2500 crores in registration booking in December 2020
The Rating firm Moody has changed its rating for Macrotech Developers from ‘negative’ in November to ‘stable,’ citing better liquidity after the realtor successfully refinanced one of its projects.
The Indian real estate market is on revival path after few years of slack, worsened further by the pandemic. The revival will impact the overall demand and supply sides which places the company in question in a better position. It already has a positive track record with 91 completed projects under its belt of 77.22 sq ft of developable area. Moreover, it offers a well-diverse product portfolio in affordable housing, luxury housing, commercial and retail properties categories.
On the flip side, the company’s debt burden would remain a concern for interested investors. Moreover, timely completion of projects, labour issues, and the ongoing pandemic condition can impact its profitability.
Key points of Macrotech IPO
- The Rs 2,500 crore IPO will open on April 7 for two days, until April 9, 2021
- The issuer would look to raise Rs 500 crores through a pre-IPO placement route
- About 50 percent of the offer is reserved for qualified institutional buyers. And, retail investors and non-institutional investors get up to 35 and 15 percent, respectively
- Eligible employees receive a quota aggregating up to Rs 30 crores
- The total issue size consists of 51,759,834 fresh equity shares
- Investors must apply for a minimum of 30 shares, translating into a minimum investment amount of Rs 14,580
ICICI Securities, Edelweiss Financial Services, JM Financial, YES Securities (India), SBI Capital Markets, and BOB Capital Market are the book-running lead managers of the offer. The company intends to use Rs 1500 crores to repay debts and Rs 375 crores to acquire building rights and general corporate purposes.
Macrotech Developers initially filed in 2009 with SEBI seeking approval for Rs 2,800 crore IPO and again in 2018 for Rs 5,500 crores. Naturally, the issuer is trying to benefit from the recent liquidity glut in the market.
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