THE cash-starved realty sector is sprinting to the market regulator Sebi to raise around Rs 14,000 crore or $3 billion in initial public offers (IPOs). At least seven realty companies, including Lodha Developers, Sahara Prime city, Emaar MGF and BPTP, have either filed the draft red herring prospectus (DRHP) with Sebi since Friday or plan to do it on Wednesday. “Every company intending to do an IPO is in a hurry to file DRHP, as any delay beyond September 30 will force them to get their books audited again, which might delay the whole process,” a banker handling one large realty firm’s IPO said. The banker didn’t want him or his client to be named for regulatory reasons. The audited balance sheet is valid for six months for filing prospectus. In case the company files the DRHP after six months of the annual report, it needs to incorporate audited numbers for proceeding six month period. Indian stock markets have been rallying this year with benchmark Sensex registering a gain of 75% since January to close at 16,852 on Tuesday.

Real estate companies have led India Inc in raising cash as the stock market slowly recovered since the middle of the year. Several listed realty firms, including DLF, Unitech, Indiabulls Real Estate, Sobha Developers and HDIL, went in for successful qualified institutional placements (QIP) or promoter stake sale raising over $2 billion. The ability of listed realty players to raise funds gave privately-held firms the confidence to test the primary market. It was the fall of realty firm Emaar MGF’s IPO early 2008 that marked the beginning of the slump in the primary market. Now Emaar MGF, a joint venture between Delhi-based MGF and Dubai-based Emaar, plans to re-launch its IPO to raise 3,850 crore for 10% stake dilution. In addition, the promoter is also divesting 1.17 crore shares to mop up around Rs 400 crore. This means Emaar MGF is looking at a valuation of Rs 38,500 crore, as against a valuation of Rs 70,000 crore last time round. It filed the prospectus on Tuesday. Sahara Prime City, Lodha Developers and Kumar Developers too have filed DRHP with Sebi on Tuesday. Delhi-based Ambience filed the prospectus on Friday, while BPTP, Sriram Properties will likely file tomorrow. BPTP, however, denied it was filing DRHP on Wednesday.

Sahara group’s realty arm Sahara Prime City plans to raise up to Rs 3,450 crore through initial share sale. Mumbai-based Lodha Developers plans to raise Rs 2,700 crore, while Delhi-based BPTP and Ambience plan to raise Rs 2,000 crore and Rs 1,100 crore respectively. Kumar Developers and Sriram Properties expect to raise Rs 400 crore and Rs 600 crore respectively. “We will use the IPO funds to retire high-cost debt, pay for government licence fee for our land and in developing our projects,” says Ambience chairman Raj Singh Gehlot. All listed realty companies were quick to tap QIP route when markets improved because they were the ones who were most leveraged. Now, again they are the ones leading the IPO rush because of the same reason. Besides the need to service huge debt, developers’ internal accruals too haven’t picked up in a big way as home buyers are only slowly returning to the property market and retail and office segment remains subdued. Some of the developers are also under pressure from private equity funds, which earlier invested in those companies, to go public as it would give funds exit route.