DB Realty IPO price band at Rs 468-486

DB Realty today said it plans to raise as much as Rs 1,500 crore through an initial public offer (IPO) and will sell each share at a minimum of Rs 468 and a maximum of Rs 486.

The real estate player said it will invite bids between January 29 and February 2. Each equity share has a face value of Rs 10.

The company, which focuses on residential, commercial, retail and other projects like mass housing and cluster redevelopment, plans to use proceeds of this issue to repay debt and fund construction of ongoing projects.

"We propose to meet the requirement of funds towards construction cost of four ongoing projects from the net proceeds over the next 12-24 months. Besides, we will use the money to repay a loan of Rs 80 crore to IDFC," DB Realty, Managing Director Shahid Balwa told reporters here.

He said the company has Rs 600 crore of consolidated debt, which mainly comprises of construction loans. The balance of the net proceeds will be utilised for general corporate purposes, including strategic initiatives and acquisitions, brand building exercises and strengthening of marketing capabilities.

Balwa said the company currently has 11 ongoing projects, aggregating to 19.51 million sq ft of saleable area.

DB Realty plans to inject Rs 1,044.6 crore into four residential and commercial projects in Mumbai and Pune named Orchid Zone, Orchid Centre, Ascot Centre II and Orchid Corporate Park by 2013, according to the share sale document.

"We have already acquired land/development rights for these projects. Relevant certificates and approvals required to commence the construction and development work for the projects have either been obtained or are in various stages of approval," the company said in its offer document.

Development of residential projects comprises 85 per cent of the company's business, while commercial projects constitute about 4-5 per cent.

Transfer of development rights (TDR) make up the remaining nine per cent.

At present, promoters and promoter group hold 73.75 per cent stake in the company, while the non-promoter group including private equity investors, foreign bodies, trusts and individuals own 26.25 per cent stake cumulatively.

"We will sell around three crore shares. So, on the lower band of the issue, the promoters will offload 13.4 per cent stake while on the upper band they will dilute 12.75 per cent," DB Realty Group, CFO, Jayesh Doshi said.

Enam Securities Pvt Ltd and Kotak Mahindra Capital Co are the book running lead managers to the issue.