Prestige Estates Project Ltd has indicated that they are hopeful that subscription to their IPO will gather steam on the last day of the offer period. The issue, which opened on October 12, is closing on October 14 and has been subscribed 0.0013 times by retail and institutional investors excluding anchor investors.
The Bangalore-based real estate company aims to raise Rs 1,200 crore from this offering which will see a dilution of around 20 per cent of the promoters’ stake.
The company has said that there was no possibility of extending the offer period. “Most of the investors enter into an IPO on the last day of the offer. We don’t think there is any need to extend the offer period as we are confident that it will get a good response,” Venkat K Narayana, chief financial officer of Prestige Estates Project Ltd, said.
Earlier, the company raised Rs 216 crore from 25 anchor investors by selling 11.77 million shares. The government of Singapore, BlackRock, HDFC, HSBC, Axis mutual fund, Mirae Assets among others are some of the anchor investors of the issue.
Enam Securities, UBS, JP Morgan and Kotak Mahindra Capital are the book running lead managers of the issue.
As per the red herring prospectus, the company will use 15-20 per cent of IPO proceeds to part repay the debt of the company. The consolidated debt book of the realtor stands around Rs 2,020 crore with a leverage of 2.6 times that is expected to come down to one time post-IPO.
Further, it will use 65 per cent of the proceeds on ongoing projects with the remainder being used as working capital investment.
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Though some of the brokerage houses have recommended not to subscribe to this IPO on the back of the company’s high debt and lesser margin expansion prospects, some others have given a positive view on the back of long-term capital appreciation prospect.
Prestige Estates had posted a gross revenue of Rs 1,086 crore with a net profit of Rs 145 crore by the end of March, 2010.