Indiabulls Real Estate plans $600 mn GDR

Property developer Indiabulls Real Estate (IREL), which was spun off from Indiabulls Financial Services, is planning to raise nearly $600 million (nearly Rs 2,500 crore) through a GDR issue to fund its projects.

It is likely that the company would raise the funds through the Luxembourg Stock Exchange, sources said.

The company's move assumes significance in the wake of the RBI increasing the interest rates, thereby squeezing the liquidity in the economy and its communique to commercial banks to reduce exposure to the real estate sector. The RBI raised interest rates to a 4-1/2 year high and raised banks' deposit requirements. Goldman Sachs group on April 2 said corporate loan growth would slow to about 20 per cent from 30 per cent in the financial year ended March 31.

IREL shares rose by 2.88 per cent to Rs 303.20 on Monday. "Real estate sector is here to stay but returns may be moderated,'' said an analyst.

In a notice to the BSE, the company said it was also planning to issue 1.50 crore warrants fully convertible into Rs 450 crore equity shares of the company to its promoters "" Sameer Gehlaut, Saurabh Mittal and Rajiv Rattan. The promoters' stake in the company would go up from 30 per cent to 38 per cent after the issue of warrants.

Each warrant can be converted into one equity share at Rs 300 after a year of the sale.

Gehlaut owns 7.2 per cent of Indiabulls Financial Services and Crown Capital owns 4.3 per cent of the company. Rajiv Rattan owns 3.6 per cent, while Saurabh Mittal owns another 2.05 per cent as of December 21, 2006.

Recently, the company received board approval for issuing GDRs, ADRs, FCCBs for the proposed fund mop-up.