Lodha Developers defers IPO amid market turmoil

MUMBAI: The mayhem in the stock market has forced realty developer Lodha Developers to delay its proposed initial public offer (IPO), said two persons with direct knowledge of the development.

The real-estate developer, which has got capital market regulator Securities & Exchange Board of India’s approval for the IPO in July, is yet to take a call on the timing of the issue.

Lodha had filed its draft red herring prospectus for the issue in April. This is the second time that the Mumbai-based developer has filed papers for an IPO. The company had filed a prospectus with Sebi in September 2009, but had to withdraw it owing to weak stock market conditions then.

With its size pegged at about Rs 5,500 crore, this would have been be the second-biggest real estate IPO in the country after realty major DLF raised around Rs 9,200 crore through its IPO in 2007.

“Apart from the delay, the issue size may also get reduced to reflect the revised peer group valuation of listed real estate companies. The total fund raise may get revised to Rs 4,000-4,500 crore,” said one of the persons mentioned above.

Over the past one month, benchmark indices Nifty and Sensex have declined 7.9 per cent and 7.8 per cent, respectively, while BSE Realty Index has slipped over 19 per cent. A series of defaults, delayed payments of debt by the group companies of IL&FS following rating downgrades for IL&FS has triggered liquidity concerns resulting in stock market meltdown.

In September, Lodha Developers’ MD Abhishek Lodha had told ET that the IPO continues to be on track and the company will be taking a call on the timing of the issue after the inauspicious Shraadh period.

On Friday, in its response to ET’s email query, Lodha Developers responded that the Shraadh period has just ended and the company is in discussions with its book running lead managers (BRLMs) to decide the timing of its proposed IPO, and a decision will be taken soon.

“The Sebi’s approval is valid for a period of one year from the date of final observations. Withdrawal of the IPO is not under consideration,” the response said.

On Thursday, Fitch Ratings affirmed Lodha Developers’ Long-Term Issuer Default Rating at ‘B’. The Outlook is Stable.

The agency has also affirmed the rating on the outstanding $325 million 12 per cent senior unsecured notes issued by Lodha Developers International and guaranteed by Lodha and certain subsidiaries at ‘B’ with a Recovery Rating of ‘RR4’.

In 2017-18, Lodha had reported cash collection and property presales of Rs 8,560 crore in 2017-18 against Rs 7,670 crore a year ago and Rs 8,130 crore against Rs 6,970 crore a year ago, respectively, Fitch said.

“The ratings are constrained by Lodha’s high leverage, which we expect to remain elevated in the financial year ending March 2019 (FY19), before inching lower over FY20-21 as the company completes the construction of its London projects and starts to access cash,” the rating agency said in a statement.




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