Embassy Office Parks REIT, a joint venture between Bengaluru-based Embassy Group and private equity major Blackstone Group, made a positive debut on the stock markets on Monday with its units listing at the issue price and inching higher thereafter.
Units of the real estate investment trust (REIT) opened for trading on the BSE at the issue price of Rs 300 apiece. The units rose as much as 8.2% to touch a high of Rs 324.50 apiece.
The scrip closed at Rs 314.10 apiece, up 4.7% from the issue price, commanding a valuation of Rs 24,238.01 crore ($3.5 billion at current exchange rates).
The positive start follows India's first public issue of a REIT. The issue was covered more than twice while the portion set aside for other investors, including corporate houses and non-retail individual investors, was subscribed more than three times.
The REIT raised as much as Rs 4,750 crore ($682.5 million) through the IPO. It was priced at Rs 299-300 per unit.
The maiden REIT offering saw participation from ace stock-market investor Radhakishan Damani — the promoter of listed company Avenue Supermarts Ltd, besides Capital Group, TT International, Fidelity and international institutional investors.
Embassy Office Parks is Asia’s largest REIT in terms of portfolio size at 33 million sq ft.
The Embassy REIT is seen as path-breaking as it could set the stage for other developers to tap the public markets for capital.
This is after another similar investment instrument, Infrastructure Investment Trusts (InvITs), failed to take off with two poor InvIT performances.
In May 2017, IRB InvIT Fund — sponsored by listed road developer IRB Infrastructure Developers Ltd, made a muted stock market debut and continued its poor performance post listing.
That rubbed off on Sterlite Power Grid Ventures' India Grid InvIT whose public offer coincided with IRB InvIT's listing. Sterlite’s offering managed to sail through in May 2017, and tanked on market debut.
Two InvITs called off plans to float a public offering, while L&T Infrastructure executed a private placement of its InvIT units.
The Blackstone-Embassy joint venture was formed in 2012 with an aim to develop office projects. The duo had filed an application with SEBI to form the REIT in 2016. The REIT was set up in March 2017. It operates in Bengaluru, Pune, Mumbai and Noida.
SEBI had first notified the REIT regulations in 2014. However, few developers showed interest in setting up REITs as investors wanted more measures, including tax breaks. SEBI subsequently modified the regulations several times in a bid to attract investors.