Lavasa, a hill city project majority owned by Hindustan Construction Company, plans to raise as much as Rs 1,500 crore (Rs 15 billion) through an initial public offering to fund the cost of the project being planned near Pune. The company plans to sell shares by 2010.
"We will come up with the share sale by October 2010. The size of the offering would be 10 per cent of the valuation of the project (Lavasa), which currently stands at Rs 10,000 crore (Rs 100 billion) and is expected to go up to Rs 15,000 crore (Rs 150 billion)," said Rajgopal Nogja, president, Lavasa Corporation.
The Lavasa project has received an investment of Rs 450 crore (Rs 4.5 billion) from Axis Bank, Allahbad Bank and Bank of India for a stake of 2.5 per cent, 1.5 per cent and 0.5 per cent, respectively.
"These would be converted into equity at the time of the IPO. If in case, the initial offer does not happen, the conversion would take place at the end of five years," Nogja said.
Lavasa hill station is being developed by Lavasa Corporation, a subsidiary of HCC. The company today entered into an agreement with Space Investment Co LLC to build and manage SpaceWorld, a space edutainment centre in Lavasa.
The joint venture will invest Rs 400 crore (Rs 4 billion) in the project with 81 per cent owned by SIC and 19 per cent by Lavasa Corporation. The space centre project is spread over 65 acre.
"We will invest Rs 76 crore (Rs 760 million) from the surplus cash flow of our company," said Rajgopal Nogja, president, Lavasa Corporation.
HCC's third-quarter profit fell 7.4 per cent to Rs 23. 2 crore (Rs 232 million) as compared with Rs 25.05 crore (Rs 250.5 million) for the corresponding period last year.
The hill station is being developed by HCC, Avantha Group and Venkateshwara Hatcheries, with 65 per cent, 15 per cent and 12.5 per cent stake, respectively.
Lavasa Corporation has sold nearly 1,500 residential apartments in the first phase of its project.
The hill station will also have around 1,000 hotel rooms, operational by November, according to Nogja."We started the sale of our residential units at Rs 2,000 sq ft and now it has reached Rs 3,500 sq ft," said Nogja.
The hill station project will be complete by 2016 and the company is expecting a realisation of Rs 1,47,000 crore (Rs 1,470 billion) according to Nogja.