Recently, the promoters of Godrej Properties have sold the shares of the firm through an institutional placement programme (IPP) and now, the Phoenix Mills is looking to raise up to Rs 1,000 crore through various options, including the qualified institutional placement (QIP) route and has moved for an enabling provision for the same. But history tells us realtors’ QIPs are nothing better than dud shows. According to a VCCircle study, of the dozen odd QIPs floated by real estate firms over the past three years, all but one had seen the investors sitting on losses. And not just any loss, but an average value erosion of around 50 per cent (without factoring in opportunity cost of capital).
So where does this leave the future institutional placements? Not where the realtors would like to see those, says a senior analyst from a domestic brokerage but does not wish to be named. “Investors have lost faith in developers,”
According to him, although the overall market has fallen, the realty index has underperformed the benchmark Sensex. “All listed players have messed up their business strategies which eroded the confidence of investors,” he adds.
In total, the listed real estate firms have raised capital to the tune of $2.5 billion from qualified institutional buyers since March 2009, when the stock market valuations bottomed out after the bloodbath during 2008-09.
Companies who have raised money through QIPs include IndiaBulls Real Estate, Sobha Developers, Hubtown Ltd (Ackruti), Sunteck Realty, Ansal Properties & Infrastructure Ltd, to name a few. And some developers like Unitech, Parsvnath and Housing Development and Infrastructure Ltd (HDIL) have actually raised multiple tranches via the QIP route.
However, Sobha Developers is the only one who came up with positive returns. The Bangalore-based developer had issued shares to investors at Rs 209.4 a piece and it is now trading at Rs 325, thanks to a major pull in the past five months when the scrip has rocketed over 75 per cent after hitting a 52-week low in December.
Adi Godrej-promoted Godrej Properties has recently seen its promoters selling part of their stake in the company to meet minimum public shareholding norms. Those shares were sold for Rs 575 apiece, against current price of around Rs 591.
The returns sheet is, otherwise, marked in red. Unitech Ltd, the third largest realtor in the country, was the first to undertake a QIP placement in April 2009 where it successfully raised $325 million at Rs 38.50 per share and came up with a second offering at more than double the price just after two months. The second QIP was at Rs 81 per share, which was mopped up in eight hours straight by Halbis Capital Management (part of HSBC), TPG, Prudential, Nomura Securities and Farallon Capital Management, besides DE Shaw, Sansar Capital, Sandstone Capital, Amiya Capital, Duquesne Capital, DWS and Mirae Asset Management.
The investors who bet on the company in the second round of QIP have seen major value erosion. Unitech shares last traded at Rs 22.9 a unit on the Bombay Stock Exchange.
But the biggest value erosion has come in HDIL. It had issued shares at Rs 268.18 apiece during its second QIP trail and in the first round of fundraising, it had issued shares at Rs 240 per share. The value of the stock is now Rs 73.50 per share, an erosion of 72.59 per cent and 69.3 per cent, respectively. Investment biggie Blackstone had committed $50 million as an anchor to the placement in the first round of QIP. Other investors to the issue were KKR and Fidelity (Check the table for more data).
Still, some of the developers say that their shares made money for some investors who had exited earlier.
Kamal Khetan, managing director of Mumbai-based realty company Sunteck Realty, says that the overall market sentiment is bad and it is not just realty stocks. “Having said that, raising equity at this point is very difficult,” he adds.
Khetan points out that most of the funds who had invested in the company’s QIP have exited the stock with profitable exits, including a US-based pension fund and a Singaporean hedge fund. But he acknowledges that all investors might not have been lucky. Sunteck Realty had come up with a QIP offering in November 2009, where it raised $34 million by offering shares at Rs 534 a piece. The share price is now down over a quarter.
Understandably, investing in Indian realty is hurting profit and that won’t spell well in a risk-averse, cash-stringent investment scenario.
Source:www.vccircle.com
No comments:
Post a Comment