Real estate developer DB Realty has set a price band of Rs 468-486 a share for its initial public offer (IPO) that would value the company at Rs 11,700 crore ($ 2.5 billion). At this pricing, it would be the fourth most valued pure realty player in the country behind DLF, Unitech and HDIL.
The Mumbai-based real estate developer is looking to raise as much as Rs 1,500 crore ($325 million) through the IPO. The issue, that will open on January 29 and close on February 2, is being managed by Enam Securities and Kotak Mahindra Capital. The IPO also carries a greenshoe option for 10% of its total size.
DB Realty is raising the money for construction and development of certain projects worth Rs 1,045 crore and repayment of loan from IDFC worth Rs 80 crore. The realty firm has outstanding loans of Rs 751 crore.
DB Realty is backed by Lehman Brothers, Trinity Capital and IL&FS who own 5.37% each in the company. Based on the price band for the issue, each of these investors could be making 2.5 times (or 40% annualised return) on their three-year-old investment in the company.
Another entity who is making a neat pile is Walkinson Investments Limited, whose antecedents could not be ascertained. It had chipped in with Rs 525 crore through compulsorily convertible debentures in March 2009, which were converted into equity shares of the company last September. At the upper end of the price band, it is estimated to be sitting on an unrealised gain of a cool 80% on the 10-month-old investment.
Jointly promoted by Vinod Goenka and Shahid Balwa, DB Realty has 10 ongoing projects, aggregating approximately 18.61 million sq ft of saleable area. For the year ended March’09, it had total income of Rs 471 crore with net profit of Rs 145.8 crore.