MUMBAI: It’s second-time unlucky for Indian realtors hoping to garner some desperately needed cash by floating their real estate investment trusts in Singapore.
On 5th june, Indiabulls Real Estate said its plans to float a Reit to mop up $286 million is being extended. Analysts said this was due to very poor response from retail investors.
The Reit had opened on 2nd june and was supposed to close on 5th june but now will close on 6th june following a last-ditch attempt to gather investors.
Ajit Mittal, chief executive officer of Indiabulls Properties, however, said the issue has been oversubscribed.
“We are extending it because merchant bankers said many retail investors from Malaysia, Indonesia and nearby countries want to invest”.
Unitech, India’s No. 2 realtor, had earlier pulled its plan to raise $700 million similarly.
Indiabulls couldn’t sell the mandatory minimum 1,000 units — it managed just one-third of it, which is why it had to extend, a source familiar with the situation said. Indiabulls Properties Investment Trust, the entity floating, had offered an attractive yield of 9.8% on the issue.
But the institutional portion of the issue saw good interest, and was oversubscribed by 1.8 times.
David Lum, an analyst at Daiwa Institute of Research Singapore, said the market conditions are pretty delicate and most issuers are pretty cautious.
The ones that were launched late last year haven’t been doing well. The subprime situation has to be over.”
Indiabulls plans to list its Elphinstone and Jupiter Mills properties in Lower Parel with an area of 3.4 million sq ft.
“We remain apprehensive about Indiabulls’ plans to list its Elphinstone and Jupiter properties in Singapore in the current market conditions,” Sandeep Mathew, an analyst at BNP Paribas India Solutions, said in a note to clients on May 23. “A strong balance sheet indicates that the listing is more of an effort to return cash to promoters.”
Lakshmi Niwas Mittal, steel baron and the world’s richest Indian, is the anchor investor in the issue, having bought 91 million shares. Merrill Lynch and Deutsche Bank AG are the bookrunners of the issue.