In contrast, SEBI returned the draft IPO documents of Santhan Textiles Ltd on July 31. Additionally, SEBI has lifted the abeyance on the proposed Rs 2,200 crore initial share sale of SK Finance.

The five companies, that submitted their preliminary IPO papers to SEBI between March and June, received observation letters from the regulator between July 30 and August 5. In SEBI’s terms, obtaining an observation letter signifies the regulator’s approval to proceed with the public issue.

According to the draft red herring prospectus (DRHP), Bajaj Housing Finance’s Rs 7,000-crore IPO includes a fresh issue of equity shares worth up to Rs 4,000 crore and an offer for sale (OFS) of equity shares worth Rs 3,000 crore by its parent company, Bajaj Finance.

This share sale is being conducted to comply with the Reserve Bank of India’s (RBI) regulations requiring upper-layer non-banking financial companies to be listed on stock exchanges by September 2025. The proceeds from the fresh issue will be used to strengthen the company’s capital base to meet future capital requirements.

Manba Finance’s proposed IPO consists entirely of a fresh issue of up to 1.26 crore shares, with no OFS component, as indicated in the draft papers. Currently, the promoters hold 100 percent of the Maharashtra-based Manba Finance. The fresh capital raised will be used to bolster the capital base for onward lending and general corporate purposes.

Baazar Style Retail’s IPO includes a fresh issue of equity shares worth Rs 148 crore and an OFS component of up to 1.68 crore shares by promoter group entities and other selling shareholders. The fresh issue size was initially Rs 185 crore but was reduced to Rs 148 crore after Volrado Ventures Partners Fund II raised Rs 37 crore in a pre-IPO round. The proceeds from the fresh issuance will be used for debt repayment and general corporate purposes.

Diffusion Engineers’ IPO will consist entirely of a fresh issuance of 98.5 lakh equity shares, with the proceeds being used to expand its existing manufacturing facility and establish a new one in Maharashtra.

Deepak Builders & Engineers India’s IPO will feature a combination of a 1.2 crore fresh issue of equity shares and an OFS of 24 lakh equity shares by promoters, as per the draft papers. The funds will be used for working capital requirements, debt repayment, and general corporate purposes.

The equity shares of these five firms are proposed to be listed on the BSE and NSE.

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According to the Draft Red Herring Prospectus (DRHP), the proposed IPO consists of an offer for sale (OFS) of Rs 4,000 crore by promoter BCP Topco VII Pte Ltd, an affiliate of Blackstone Group Inc., and a new issue of equity shares valued at Rs 1,000 crore.

At the moment, BCP Topco owns 98.72% of Aadhar Housing Finance.

Aadhar Housing Finance received its observation on April 5th, according to an update from the Securities and Exchange Board of India (Sebi), after submitting preliminary IPO papers to the markets regulator in February.
According to Sebi’s observation, the IPO can now be floated.

According to the draft papers, the business plans to use the Rs 750 crore in proceeds from the new issuance to cover future capital needs for further lending. Some of the funds would also be used for general corporate reasons.

Aadhar Housing Finance provides a variety of mortgage-related loan products, such as loans for the acquisition and construction of commercial real estate, home improvement and extension loans, and loans for the purchase and construction of residential real estate.

The company is a retail-focused HFC that specializes in low-income housing, catering to consumers who are low-to-middle-income and economically disadvantaged and who need small-ticket mortgage loans.

As of September 30, 2023, it has a network of 471 branches, including 91 sales offices.

The business gains from Blackstone’s assets, connections, and knowledge as one of the top investment firms globally.
In January 2021, Aadhar Housing submitted draft documents to Sebi to raise Rs 7,300 crore through the sale of initial shares.

Although it secured the regulator’s approval to go public with the issue in May 2022, it chose not to proceed with the launch.

The book-running lead managers for the issue are ICICI Securities Ltd., Citigroup Global Markets India Pvt Ltd., Kotak Mahindra Capital Company Ltd., Nomura Financial Advisory and Securities (India) Pvt Ltd., and SBI Capital Markets Ltd.

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Aadhar was purchased by private equity firm Blackstone in 2019 for roughly $300 million as a result of the group’s wager on the rising demand in India for finance and affordable housing.

The IPO is Aadhar’s second attempt at listing following the cancellation of a $1 billion plan in 2022 due to market turbulence following the conflict between Russia and Ukraine.

According to these sources, Aadhar intends to submit its IPO paperwork to India’s market regulator in the upcoming two weeks.

In the midst of record-high stock markets in India—a rare bright spot for international investors—a deal would be the most recent instance of private equity investors seeking to sell off portions of their businesses.

A rapidly expanding economy and promises of political stability are driving the nation’s record-listing intentions at the moment. Its benchmark index, the Sensex, is trading close to record highs, and its stock market recently surpassed Hong Kong’s to become the fourth largest in the world.

“Blackstone intends to sell a portion of its holding to profit from the current state of the market. Since the IPO plan is still confidential, one of the two sources, who wished to remain anonymous, stated that timing is crucial for a progressive sell-down.

As consultants for its most recent initial public offering (IPO) filing, Aadhar has enlisted investment banks Citi, Nomura, and India’s Kotak and ICICI. The sources stated that a Mumbai listing is anticipated by May.

Citi, Nomura, and Blackstone all declined to comment. Aadhar, ICICI, and Kotak did not reply to requests for comments.

Aadhar provides house loans up to $18,000 to individuals with as low as $75 monthly income in a nation where escalating real estate costs have made major city property ownership more and more challenging.

According to the company, “economically weaker sections and low-income groups” receive the majority of its loans.

Although state-owned and private banks account for the majority of mortgage loans in India, more recent private equity-owned companies are vying for market dominance. In recent years, investors like Morgan Stanley and Warburg Pincus have placed bets on the industry.

Aadhar claims to oversee $2 billion in loans across 20 Indian states and 479 offices. According to its annual report, during 2022–2023 its net profit increased by 22% to $65 million, while its total income increased by 18% to $245 million.

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The real estate developers expressed disappointment at the decision of the Reserve Bank of India to maintain the status quo on policy rates in its fifth bi-monthly monetary policy review of the financial year.

The Reserve Bank of India since February has reduced interest rates by cumulatively 135 basis points in five consecutive reductions in 2019, in an effort to boost growth and liquidity in the financial system. With no reduction today, the aggregate decrease of the repo rate remains unchanged at 5.15% for banks to borrow. All six members of the Committee voted against the cut in rates.

“In the past as well, most of the banks, which influenced the development of the real estate sector, has not passed on the benefit of the rate cut by the RBI to the customers. In this case, the RBI will take a holistic approach rather than just glance at the Repo rate revision. It must take an important area into account, such as reforming real estate loans and reintroducing subvention schemes. It must take steps to ease funding in the sector that is so important. In a volatile market, an IPO by a small finance bank that raises Rs 76,000 crore shows no shortage of funds but there is a serious problem of confidence. Rajan Bandelkar, President NAREDCO Maharashtra, said that the RBI and government must work on this topic to reinstate the life into the system and the property market.

According to an RBI report, the GDP growth of Q2 was substantially lower than expected. Different high-frequency indicators suggest that the conditions of domestic and external demand have remained low. Based on previous data, a modest rise in business sentiments in Q4 is suggested in the business expectations index of the Reserve Bank’s industry outlook survey.

“RBI’s decision not to lower the interest rate has come to the industry as a surprise and some disappointment. The lower rate of interest would help to boost credit demand and economic investment, leading to overall economic growth. It would have been an enormous relief to certain ailing industries, such as real estate and automobiles,” said Chairman and Managing director of Knight Frank India, Shishir Baijal.

However, real estate developers and industry experts believe that it is also necessary to lower home loan rates in order to increase demand for housing.

From a real estate viewpoint, Of course, a rate reduction is always welcome, as it adds to the overall sentiment. “The slow trend in housing sales in top property markets has now extended to even smaller cities, with residential sales declining by 2% in 35 metros and smaller cities across the country in the quarter ended September,” said Anuj Puri, Chairman, ANAROCK Property Consultants.

There was also a modest 1% decrease from a year earlier in weighted average prices across these markets. In 14 cities prices have been dropped, while nine cities recorded increase.

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In the first half of 2019, property developers in India raised more money from primary markets than they rose in a decade. As from June, Prime Database reported that developers raised approximately Rs 10,023 crore from the primary markets via two qualified institutional placements (QIPs) and a real estate investment trust (REIT) initial public offering (IPO), which increased by an eight-fold over 2018, and the most in the past decade.

Subhrajit Roy, executive director and head, equity capital market origination at Kotak Investment Banking, said; that “equity market instruments have received more attention from large property companies in the last two years, as investors have shown a strong preference for organized brand developers with low debt levels and good records in execution.”

“To the contrary, the strong growth trend in commercial real estate contributed to the concern of shareholders in subscribing to the latest QIPs published by real estate companies, particularly those in Delhi NCR, Mumbai and Bengaluru,” he said.

Real estate firms which have so far met the majority of their financing demands by NBFCs or secondary markets now find primary markets an appealing way to raise capital with Indian corporate bond markets experiencing their worst downturn of a decade. As of 2017, Indian bond markets’ growth had slowed down and has shown their lowest rate in more than a decade later in May at 9.7%, according to Bloomberg’s economic index of June.

Secondary market investment sentiment, already shaken by the IL&FS crisis, in September 2018, continued to soar after mortgage lenders, the Dewan Housing Finance Corp. Ltd has postponed its outstanding bond interest payments. This has resulted in a liquidity crisis which has made it costly for NBFCs and in turn for real estate businesses to borrow funds from secondary markets.

But, although the capital investment in real estate firms peaks, interest on this is limited to big businesses with small concentrations of debt.

“Within big, well-established businesses with powerful balance sheets, investors’ confidence came back from implementing the Real Estate (Regulation and Development) Act (RERA). But a lot of developers still stay on the market and find it hard to raise funds. In itself, this shows that there will be significant consolidation in the industry,” said Motilal Oswal Investment Banking, Managing Director, Girish Nadkarni.

“We also see that big firm’s promoters are willing to take advantage of equity markets as stock prices have recovered and valuations have improved significantly, which makes it easier for them to raise funds via equity capital markets,” he said.

In March, the Embassy Office Parks REIT, backed by Blackstone, raised Rs 4,750 crore through Indian’s first REIT, while the DLF raised Rs 3,200 crore via a QIP and another Rs 21,100 crore from primary markets by Godrej Properties.

These issuances will only improve as the latest QIPs by large brands such as DLF and Godrej Properties add up to a favourable boost to the success of the excellent products within the immovable sector in the use of primary markets according to Salil Pitale, joint managing director and co-chief executive officer at Axis Capital.

Agreeing with Pitale, Motilal Oswal’s Nadkarni said: ‘As investors earn money on QIPs of large immovable companies and increase their risks, more mid-market players and some who want to raise funds to refinance their debt requirements are gripping primary markets.’

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Real estate market is the diciest market where prices are stagnated in the last few years. Because of this reason, the real estate market is been destroyed. Many developers/builders are trying to cope up with various sales and marketing strategies.

Inviting Expression of Interest (EOI) to sell apartments in an IPO-like way is one such technique which could be named as market disruption. This methodology has been connected rather specifically in the Indian real estate market but has met with progress.

Just the reputed developers have tried different things with this technique however as not every person can stand to open up to the world and welcome EOIs provided that the venture is under-bought in, it exposes the builder in the open market. Besides, selling a housing venture through the imaginative strategy for semi-book building additionally requires that builders have certainty about the achievement of their undertaking, as the value revelation process is driven by major ‘demand-supply’ measurements.

There are many benefits for Homebuyers by purchasing property in an IPO style.

1) Flats are allocated on a first-come-first-serve basis and consequently, the purchaser has a higher likelihood of getting his/her decision of floor as well as a view with no PLC (special area charges).

2) A purchaser enters the undertaking at a sensibly lower value point.

3) Regardless of whether somebody puts an offer that is higher than the last value, the individual should pay just the last cost and not his offer cost.

4) On the off chance that the IPO is effective, the purchaser is guaranteed that the project will be conveyed, as developers can’t redirect the cash under the RERA Act.

5) If the IPO is not successful, then the buyer will be exposed with very minimum loss.

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City-based affordable housing firm VBHC Value Homes is planning an initial public offering (IPO) by 2019. The company, which plans to raise upward of 1,000 crore, intends to use the proceeds to expand operations across the country. It may also offer exits to some of its investors.

The company, co-founded by Jaithirth Rao and P S Jayakumar, is backed by a number of investors including Japanese real estate conglomerate Daiwa House Industry Co, Caspian Investment Advisors, The Carlyle Group, International Finance Corp, Tano Capital and HDFC Bank. The PE funds and small investors own over 60% stake in the company valued at over 800 crore.

VBHC, which sells homes in the ₹16-40 lakh price bracket, had earlier planned to raise money through public market in 2017.

“We postponed the IPO due to policy changes like real estate regulatory bill, goods and services tax and demonetisation,” VBHC chairman Jaithirth Rao said. However, he declined to comment on the exact size of the offering.

Ram Walase, CEO, said: “We will launch about one million sqft of projects across Bangalore, Pune and Mumbai over the next year. Some of our existing projects will also see their next phases opening up.”

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