Lavasa Corp files for IPO, eyes $125M

City development and management firm Lavasa Corp has filed for its initial public offer to raise Rs 750 crore ($125 million), four years after a previous attempt did not materialise. The firm, which had previously hit headlines over alleged violation of environmental norms, has cut the proposed size significantly to just a third of the original proposal where it sought to scoop up Rs 2,000 crore.

Lavasa, a subsidiary of construction firm Hindustan Construction Company, is engaged in the development, and management of Lavasa, a hill city development in the state of Maharashtra.

As of June 18, 2014, it had approximately 10,574 acres of largely contiguous land available for development within this designated area. This land consists of approximately 10,119 acres of land that it has purchased and 455 acres of land is held on lease by the firm.

It expects to purchase an additional approximately 5,959 acres of land within the hill station notified area on an opportunistic basis.

Over time the firm expects to shift its revenue strategy so that an increasing proportion of revenues will be derived from revenues from businesses and service fees derived from visitors and residents located at Lavasa.

Notably, this is the second attempt of the firm to go public. The firm had filed its documents in 2010 to raised money through an IPO back in September 2010. It had received regulatory nod for the public issue in November the same year but did not go ahead with the issue.

For the year ended March 31, 2014, it had total income of Rs 239.5 crore with Rs 11 crore net loss. This marked over 50 per cent rise in revenue and sharp cut in losses from the previous year. However, the company is far from its hey days when it clocked revenues of Rs 577.5 crore with net profit of Rs 16.16 crore for the year ended March 31, 2011.

Around two-thirds of its revenues are now related to lease arrangements which include sale of built-up structures.

Lavasa intends to 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.

Besides its majority owned promoter, the company counts amongst its key shareholders Avantha Realty. 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 are managing the proposed issue.

Lavasa becomes the second company to file its documents to go public after the elections buoyed up the markets and opened up the public issue window.

A few weeks ago Manmohan Shetty-promoted Adlabs Entertainment Ltd, the firm behind theme park Adlabs Imagica, filed its draft red herring prospectus with SEBI to raise over Rs 400 crore ($68 million) through an initial public offer. The company is backed by private equity firm ICICI Venture.

Two months ago another theme park and resorts operator Wonderla Holidays successfully completed its IPO and listed with gains on the bourses.

(Edited by Joby Puthuparampil Johnson)

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