AIMing high: Indiabulls arm raises Rs 1,200 cr

                                                                                         

MUMBAI: India and Indian real estate are definitely the flavour of the season for foreign investors. Dev Property, a unit of Indiabulls, has raised Rs 1,200 crore on London’s Alternative Investment Market (AIM), solely by investing in Indiabulls’ real estate projects in India.

This fund generation comes just after the Khemkas and UK’s Apollo group raised $630 million — the largest so far — to invest in Indian realty. Indiabulls’ issue comes just
after similar offerings from the Rahejas, the Hiranandanis and Unitech.

Dev Property Development, registered in the Isle of Man, completed its maiden issue of Rs 1,200 crore by offering about 15% of its equity stake to qualified institutional investors. Some of the investors include steel tycoon LN Mittal, Fidelity, Capital Research and Govt of Singapore. Confirming the move, Indiabulls’ director Gagan Banga said that of the funds raised by Dev, about Rs 1,055 crore will be invested in its Indian projects. Since the corpus of the fund is expected to rise in the near future, the percentage of institutional stake could change. Shares of Dev are scheduled to start trading on the AIM exchange from Monday.

Dev Property’s issue was managed by Deutsche Bank, Citigroup and UBS, while CLSA was the lead marketing agent.This is the second time that Mr Mittal has invested in Indiabulls. Earlier Indiabulls Infrastructure, a subsidiary of Indiabulls Real Estate, had sold 13.3% equity stake to LN Mittal and Farallon for Rs 447 crore.

Indiabulls had recently raised Rs 437 crore by partial sale of its stake in Jupiter Mills and Elphinstone Mills development projects. Dev Property has already invested Rs 618 crore in some Indiabulls’ real estates projects. Mr Banga said that Dev Property would have the right to co-invest along with Indiabulls in all future real estate projects.

“India needs large investments to develop infrastructure in cities like Mumbai, Delhi…since there is no new supplies, such large investments could push up property prices,”
said Mr Banga.

Knight Frank had valued Indiabulls real estate projects at Rs 21,569 crore and Indiabulls’ stake in its projects at Rs 15,125 crore. But frequent policy changes are considered to be an area of concern. Macquarie Research in a recent report said that key sector risks include legislative changes regarding tax breaks, high interest rates and vastly inadequate frastructure. The government recently has put brakes on its SEZ policy fuelling speculation that it was giving in to the demands of its Left partners.

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