Leading real estate firm, Lodha Developers, on Thursday said that company is hopeful of coming back to market very soon, after it received Sebi's go-ahead for the Rs 5,500 IPO.
In an interview to CNBC-TV18, Abhishek Lodha, managing director and chief executive officer, said, "We are at a moment now, where we feel that the stars are getting aligned. The market have done a lot of things up and down, but we feel that as a company, we offer a very differentiated value proposition to investors and we are hopeful that we will come to the markets soon.”
Edited excerpts: Q: When is the IPO date likely to be announced?
A: We are at a moment now, where we feel that the stars are getting aligned. The markets have done a lot of things up and down, but we feel that as a company we offer a very differentiated value proposition to investors and we are hopeful that we will come to the markets soon.
Q: So no date announcement just yet?
A: As you know forward looking statements are not allowed to be made.
Q: We are hearing and this is the buzz in the market that the valuations have become a problem. What you are asking for and what the market is ready to give, there is a gap in that.
A: There is always a price discovery process. That is the point of having an IPO. You have very high quality investors across the globe very interested in investing in the company and you work with a cross section of those investors and understand what their estimation of the value is. So that is part of every IPO process as much as it is of our IPO process. We have sort of reached a point where we are all comfortable, the company and the investors.
One has to understand that real estate is a number of different asset classes. Just like in media you will have news media, entertainment media, sports TV, and so on, equally in real estate you have premium housing, affordable or mid-income housing, offices, retail, logistics, and so on. All the parts of real estate except premium housing are doing extremely well.
There is a misunderstanding I would say because people believe that what is happening in South Delhi and South Mumbai is really the world. However, that is not the case. It is middle India which is driving real estate. Overall the sector is doing very well except for one subclass which is premium housing.
Q: So there is excitement?
A: There is.
Q: There was supposed to be an Rs 750 crore pre-IPO placement. Is that done?
A: We have had an enabling provision in our IPO. Ultimately, our raise is one fixed amount, we could have done it either with a pre-IPO or do it in the IPO. So that is something which we had kept as an enabling provision.
A: No. The rental income business is something that we have invested in over time. We have already invested almost Rs 3,000 crore into our rental business over the last three years and we expect that to start producing very significant cash flows, again I cannot make specific forward looking statement, over the next three years.
Q: Let us move on then to basically the amounts that you will raise from the IPO. Very clearly stated, it is lever the balance sheet and the rest of the money as written in the DRHP is or you will become debt free by a) the income which will come from sale of your housing units and secondly from the rental incomes which will come in. However, if I look at the portfolio that you have currently, your rental income portfolio is a minority. Is that worrying?