Emaar MGF, the Delhi-based real estate major, is set to do a DLF. The company, a joint venture between Delhi-based MGF Developments and Dubai-based Emaar Properties, is planning to raise around Rs 13,000 crore (RS 130 billion) from the capital market to fund its rapidly growing property development business in India.
DLF recently filed a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offer of Rs 13,500 crore (RS 135 billion).
This is the country's largest IPO till date. Sources close to the development said the Emaar MGF IPO is expected to hit the markets in the second half of 2007.
Emaar MGF has projects in over 30 cities in residential, commercial, infrastructure, hospitality sectors and special economic zones across India.
According to company estimates, it would require $4 billion to fund these projects, of which $1 billion was brought in through foreign direct investment last year. The company is hoping to raise the rest of the capital through the IPO and private placement.
MGF Developments is a subsidiary of the Motor General Finance Group, which has five other companies in its fold.
The group has diversified into areas such as merchant banking, insurance, housing finance, stock brokerage, asset management, corporate advisory services, single-point fund management for corporate clients and extension of factoring to both consumer and industrial debts.
It has other JVs as well - one with the International Finance Corporation, a World Bank affiliate, and the other with Citicorp Securities and Investments, an associate of Citibank.
Prime Database CEO Prithvi Haldea expects real estate companies to raise about Rs 25,000 crore (Rs 250 billion) from the primary markets this year, with 30 companies expected to hit the market depending on the DLF issue's success.
The companies, which are expected to hit the capital market this year include Akruti Nirman, Omaxe, Gammon Infrastructure, Purvankara, Ansal Buildwel and Ansal Properties, Goel Ganga group, IJM India infrastructure (a Malaysian developer with developments underway in and around Hyderabad), IVRCL and Simplex.
In 2006, real estate companies like Parsvnath and Sobha developers raised Rs 3,400 crore (Rs 34 billion) from the market through their public issues.