MUMBAI | BENGALURU: Private equity major TPG Capital and Starwood Capital-backed real estate developer Shriram Properties is planning to raise about Rs.1,500 crore through its Initial Public Offering (IPO), said two persons familiar with the development.
The south India-based developer’s maiden share sale is expected to be concluded by March 2019.
“We are at an advanced stage of finalising the plans for the IPO and strategy with our board and existing private equity investors. We expect to take a final decision on further steps over the next few weeks,” M Murali, MD, Shriram Properties, told ET while confirming the story. He, however, did not elaborate on the size of the share sale.
The issue will be a combination of fresh offering and share sale by existing institutional investors including TPG Capital, Starwood Capital, Walton Street Capital and Tata Capital that cumulatively hold around 60 per cent equity in the company. The proportion of fresh shares and stake to be offloaded by existing investors is yet to be finalised.
These institutional investors had invested total $270 million in the company between 2008 and 2014. This is amongst few instances of private equity investors picking up equity at entity level as against the usual practice of taking exposure in the developer’s project.
The company has so far received private equity investments worth $600 million, including project and entity level investments.
The real estate arm of diversified conglomerate Shriram Group has already had discussions with merchant bankers towards concluding on lead managers for the issue. “We are targeting to be in the market during early 2019,” Murali said.
Shriram Properties is focussed on mid-income and affordable housing and has total 61.64 million sq ft of projects currently under construction and in pipeline across 38 projects. The company has so far delivered over 11 million sq ft across 26 projects.
Of the 61.64 million sq ft, projects with 20.75 million sq ft are currently ongoing and the company has sold 8.6 million sq ft of that space so far. It is aiming to sell 5 million sq ft space in the current financial year and 8 million sq ft in 2019-20.
“We have identified asset light Development Management Agreement business model for future growth,” Murali said. “We have concluded Memorandums of Understanding (MoUs) for 21 projects under this model and have already started construction at 7 of these developments.”
In February, the company had formed a platform worth Rs 1,000 crore with private equity firm ASK Group to invest in affordable, midhousing and distressed assets, which it plans to deploy over the next two years, said Murali.