One after the other the IPOs are flooding the markets –atleast on the proposal as filed to SEBI.
In the past 2 years, Infrastructure has been the hottest sector in terms of returns. That is the reason why we have seen so many New NFO for Infrastructure Mutual Funds. The data revealed in the advertisements of Mirae Asset Mutual Fund also tells the same story.
Now is the turn of the multi-billionaire Vivek Oberoi or commonly known as Vikky Oberoi led property developer Oberoi Constructions, to come out with a mega IPO.
As per the news, the plans are to launch the Oberoi Constructions IPO so as to raise around Rs 4,000 crore ($1 billion) through this IPO.
Morgan Stanley has been assigned the task to make a fair valuation of the Oberoi Constructions company. The money raised from the IPO will be used towards for acquiring land and fund upcoming new projects – a list which includes the Oberoi Garden City and four and five-star hotels all spread across the length and breadth of the country.
The company is really rich in terms of the assets it currently owns –that too in the prime location – it has a land bank of 130 acres mainly in the suburbs of Mumbai on the western sides. It has eight residential, commercial and retail projects under construction with a development potential of 21 million sq feet.
Though the stock markets are witnessing turbulent times and many IPO’s have been cancelled or delayed. But Vivek Oberoi is confident - “Stock markets will distinguish between the performers and non-performers. We are confident of a good issue,’’.
The company is building Oberoi Garden City, an 80 acre composite realty project including office complexes, malls, schools and residential townships with expected revenues of Rs 8,000 crore. The company has plans to build such projects in all the major cities including Chennai, Bangalore and Hyderabad among others. These projects will be spread over 80-100 acres. Based on land prices in different cities, these projects have a land acquisition cost of Rs 400 crore to Rs 500 crore and a construction cost of nearly Rs 2,000 crore. So the IPO of 4000 Crores will see 2000 Crores being devoted towards this land acquisition. Four hotels are planned in Mumbai and Pune. It is also scouting for properties wherever the company is building Garden City projects. The company is also looking at other infrastructure projects provided those projects have some mix of real estate elements.
The good thing about infrastructure projects is that they have some kind of “Real Worth” in terms of land and building, instead of the projected businesses like “Zero Watt Reliance Power IPO”.
| The IPO is expected by the year-end. It’s a long time and hopefully markets will see some better situations by that time as compared to the current volatile situations. Wait for some more information about price band and size of Oberoi Constructions IPO. | Table of Contents |
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