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Blackstone-backed Mindspace REIT’s IPO covered 13 times on final day
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The initial public offering of Mindspace Business Parks REIT was covered almost 13 times on the final day Wednesday thanks to high demand from investors across categories.

The real estate investment trust sponsored by K Raheja Corp and private equity firm Blackstone got bids for 877.8 million units for the 67.75 million units on offer, excluding the anchor investors’ portion, stock-exchange data show.

The quota reserved for institutional investors was covered 10.6 times while corporate houses and high-net-worth individuals bid for 15.77 times the units reserved for them.

The issue was covered 38% on the first day on Monday and sailed through on Tuesday. Mindspace has fixed a price band of Rs 274-275 per unit.

Ahead of the IPO, the investment trust raised Rs 1,519 crore ($203 million) from anchor investors on Friday. The firm mobilised the capital by issuing 55.23 million units at Rs 275 apiece to 54 investors led by Singapore sovereign wealth fund GIC, a stock-exchange filing shows. GIC invested about Rs 239 crore.

Other foreign investors included Japan’s Nomura, American asset managers Capital Group, Fidelity and Morgan Stanley, Singapore state firm Temasek-owned Fullerton and Singapore insurance company NTUC Income.

Domestic investors included IIFL Special Opportunities Fund, HDFC Life Insurance Company Ltd, SBI Life Insurance Company Ltd, Aditya Birla Sun Life Insurance Company Ltd, Max Life Insurance Company Ltd and Star Health & Allied Insurance Company Ltd. Axis Mutual and ICICI Mutual Fund via various schemes.

Many of the overseas anchor investors had also put in money in the REIT before the anchor allotment. At the time, the REIT had raised Rs 1,125 crore with GIC and Capital Group each investing Rs 450 crore.

This is the second IPO of an REIT in India. Embassy Office Parks REIT, which is also backed by Blackstone, went public last year.

Mindspace had filed its draft proposal for the IPO with the Securities and Exchange Board of India in January this year.

The REIT aims to raise Rs 4,500 crore through the IPO. This includes a fresh sale of units worth Rs 1,000 crore and an offer for sale of Rs 3,500 crore by existing unit holders including Blackstone and K Raheja group entities.

Blackstone Real Estate Partners is one of the key investors in the REIT. It had acquired a bunch of commercial real estate assets of K Raheja Corp in Mumbai, Hyderabad and Pune in 2017.

Mindspace will use the proceeds from the fresh issue of units for repaying its debt, redeeming its preference shares and for general corporate purposes.

The REIT has hired 13 bankers including Morgan Stanley India, Axis Capital, Kotak Mahindra Capital and JM Financial to manage the IPO. The other bankers are DSP Merrill Lynch, Citigroup Global Markets, ICICI Securities, HDFC Bank, Ambit Capital, UBS Securities India, Nomura Financial Advisory and Securities (India) and CLSA India.

Mindspace owns a portfolio of properties in India’s four key office markets. Its portfolio has a total leasable area of 29.5 million square feet as of March 2020. This is one of the largest Grade-A office portfolios in India.

Of the total, 23 million sq ft is completed area, 2.8 million sq ft is under construction and 3.6 million sq ft is earmarked for future development. The portfolio has five integrated business parks and five independent offices.

The portfolio has 172 tenants such as Accenture, Qualcomm, JP Morgan, Amazon, Schlumberger, UBS, Capgemini and Facebook. No single tenant contributed more than 7.7% of its gross contracted rentals as of March 2020.

The REIT clocked a net profit of Rs 513.9 crore for 2019-20 on revenue from operations of Rs 1,766 crore. Its net profit was Rs 515.4 crore for 2018-19 on revenue from operations of Rs 1,431.6 crore.

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