4 realty issues in pipeline to raise Rs 8,000 cr

As many as four public offers of equity "" initial and follow-on "" by real estate developers are in the pipeline, designed to raise a total of over Rs 8,000 crore.

Along side, at least three construction companies are looking to raise just under Rs 2,000 crore from the public. This is being interpreted as a sign of the coming of age of the sector and greater transparency seeping in.

Among the real estate companies, Delhi-based DLF alone is looking to raise Rs 5,000 crore. Ansal Properties, a listed company expecting to set up a Rs 10,000-crore township in the National Capital Region, has decided to float a follow-on issue of Rs 2,000 crore.

Parsvnath Developers has filed a draft red herring prospectus for public issue of up to 3.32 crore equity shares and hopes to raise Rs 1,000 crore by going public. In step with the trend, DS Kulkarni has planned an issue of Rs 75 crore.

Among construction companies, Akruti Nirman plans to raise Rs 1,000 crore, Ahluwalia Contracts Rs 500 crore and IJM India Infrastructure Rs 400 crore.

Real estate and construction companies are being spurred on to float public issues in part because of the transparency that is seen to have set in in the sector since the government allowed 100 per cent foreign direct investment in construction under the automatic route in March 2005, along with overall relaxation of norms. Experts say this has increased investor interest in such stocks.

"Unitech's shares have shot up from Rs 20 to approximately Rs 3,000 in the last two years," said Prithvi Haldea, chief executive officer, Primedatabase.

With the construction sector growing at 12.5 per cent a year and having a weightage of 5.9 per cent in the gross domestic product, this is the right time for construction companies to go public and unlock value.

"Compared with private equity, these companies will prefer raising money from the stock market. Private equity may translate into interference, while the public market offers more freedom and better valuation," said Gaurav Dalmiya, chairman, Landmark Holding.