City development and management firm Lavasa Corp has again postponed its proposed initial public offering (IPO) as the primary market is not yet ready to absorb another real estate related firm at its asking valuation.
Lavasa, a subsidiary of Hindustan Construction Company Ltd, had applied for an approval for IPO to raise Rs 750 crore in July last year. Securities and Exchange Board of India (SEBI) had given its nod to the issue on November 7, 2014.
The securities market regulator's approval for IPO is valid for one year post which the firm may need to refile for approval if it still intends to float its issue in the near term. Lavasa's IPO clearance expires on Friday.
Notably, this is the second failed attempt by the company to raise capital from the public. It had filed documents back in September 2010 and had received regulatory nod for the public issue in November the same year but did not go ahead with the issue. It had also cut down the size of the proposed issue in the second attempt to one-third of original issue size of Rs 2,000 crore.
A detailed email sent to the spokesperson of Lavasa to understand why it decided to skip the proposed IPO and whether it plans to refile documents anytime soon, did not elicit any response till the time of filing this report.
The company had earlier said it would use the proceeds from the issue for financing the development of certain infrastructure facilities at Mugaon; to finance construction of certain buildings at Dasve and Mugaon and to fund the repayment or prepayment of certain debt.
Lavasa's president and chief executive officer Uttam Dave had stepped down within a month of joining just after it received nod from SEBI.
Lavasa counts amongst its key shareholders Avantha Realty besides its majority owned promoter. Avantha Group chief Gautam Thapar separately owns a small stake in Lavasa taking the total group exposure to over 17 per cent while Venkateshwara Hatcheries owns 7.8 per cent. Lavasa has been associated with shareholding of politician Sharad Pawar’s close relatives.
Axis Capital, Kotak Investment Banking and ICICI Securities were managing the proposed issue.
The market sentiments don't seem to be conducive for real estate players for a public issue. Even though the public issue window has opened up post the formation of the new government at the centre, realty players might face challenges in going public as demand for real estate continues to be slow.
Commercial real estate has picked up with increased activity in leasing but residential properties are yet to see signs of a full-scale recovery.
Moreover, the performance of several listed realty firms post listing has been too poor to provide confidence to investors. Developers might like to wait till investors develop appetite for real estate companies.
The only realty player which has filed for IPO after Lavasa is Pune-based developer Paranjape Schemes. It filed its documents with SEBI for Rs 600 crore in July this year. If it goes ahead with the plan, it might become the first pure play realtor to go public in almost five years.
Over the past years, many developers have shared plans to hit public market only to backtrack later. Shriram Properties, which had said that it would hit the market by mid of this year, is yet to come out with a concrete plan. Raheja Developers, which has toyed with the idea of floating IPO many times, is yet to formally announce anything on this front.