Godrej Properties Limited, the real estate arm of the Godrej Group, is planning to raise Rs 500-600 crore through the institutional placement programme (IPP). The move is aimed at reducing its outstanding debt, which is around Rs 2,000 crore.
Pursuant to the Securities and Exchange Board of India (Sebi)’s mandate that companies in which promoters have more than 75 per cent of the total shares have to bring it down to 75 per cent, the promoters of Godrej Properties are planning to dilute their stake from the current around 84 per cent to 75 per cent through the IPP, according to Pirojsha Godrej, executive director of Godrej Properties.
“We are expecting the fund-raising to happen in this quarter or the next. We would meet the investors in the next couple of months,” he said after announcing the company’s foray into the Chennai real estate market with a Rs 450-crore residential project at Sriperumbudur.
He said the company was looking at developing more projects in cities where it already has its presence and accelerate project development activities to improve performance.
The company has presence in 12 cities across the country with around 76 million sft of property under various stages of development. The largest project, comprising 24 million sft in Ahmedabad, is expected to be completed in 10 years, while many of the other projects would be completed in three to four years.
The company has increased the speed of projects by developing 3 million sft in 2011, as compared with around 1.5 million sft in the previous year.
“Our target is to develop 10 million sft per year in the next four to five years,” Godrej said.
Godrej said they would also rope in private equity investors in the special purpose vehicle (SPV) level for particular projects and would not look at PE investments at the entry level. It has roped in HDFC as a PE partner for Godrej Palm Grove, its maiden project in Chennai.
Godrej Palm Grove, with a total of 1,500 apartments, will be developed in joint venture with Addison and Co Limited, a part of Chennai-based Amalgamations Group that will provide 12.5 acre land for development.