The Initial Public Offer of Oberoi Realty was subscribed 12.13 times till 5 pm on Friday, the last day for bids. Data with the National Stock Exchange (NSE) show bids for 391.67 million equity shares were received, as against 32.44 million shares on offer, in the price band of Rs 253 to Rs 260. Oberoi Realty has turned out to be the best real estate IPO of the year, in terms of overall subscription.
The institutional portion was subscribed 22.14 times, said the company. While the non-institutional portion was subscribed 3.61 times, the retail segment remained under-subscribed, at 0.94 times.
Nitesh Estates was the earlier developer to launch an IPO, in April. The issue was subscribed only 1.13 times, with the retail and non-institutional investor categories remaining under-subscribed. The institutional portion was subscribed 2.54 times. DB Realty was the only other real estate issue of the year and was subscribed less than three times. While its retail portion was under-subscribed, the institutional and the non-institutional investor segments were subscribed over four times each.
Prestige Estates Projects plans to raise around Rs 1,200 crore through an IPO that will open on Tuesday and close on Thursday. The price band has been fixed between Rs 172 and Rs 183, according to reports. The company has 24 years of experience in real estate development and has completed 150 projects, of 34.23 million sq ft.
Further, at least a dozen real estate IPOs worth Rs 12,000 crore are in the pipeline, with about half of these – Emaar MGF, BPTP, Lodha and Kumar Urban – having got the regulator’s nod. According to central bank estimates, realty developers have piled up Rs 75,000 crore debt and need to pay around Rs 25,000 crore in interest and principal this financial year. Hence, successful IPOs are critical for developers such as Emaar MGF, BPTP and Lodha, among others, who want to use part of the proceeds to pay debt.
Valuation will be a key issue for the success of real estate IPOs, apart from the track record, cash flows, transparency and management depth of developers, among others, say analysts tracking the sector.