Godrej Properties QIP raises Rs 6,000 cr, logs demand 4 times issue size

Company say QIP largest by an Indian real estate company; proceeds will be used on pipeline of projects

Godrej Properties has raised Rs 6,000 crore through a qualified institutional placement (QIP), making it the largest such fund-raise by a real estate company in India.

 

The company will use the proceeds on a pipeline of projects, saying the demand for the QIP was four times the size and “was fully covered with long-only demand.”

 

Indian real estate developers, including Macrotech Developers (also known as Lodha Group), Prestige Estates, Brigade Enterprises and Keystone Realtors, used QIPs to raise about Rs 13,002 crore in the first nine months of 2024. On November 14, Oberoi Realty received shareholder approval to raise around Rs 6,000 crore through a QIP.

 

Developers use QIPs for different purposes, including repaying borrowings, acquiring or developing land, funding working capital requirements, investing in joint ventures, providing unsecured loans to their subsidiaries, and general corporate purposes.

 

The real estate industry likes QIPs for transparency, strong post-pandemic recovery, a surge in residential sales value, Nifty realty index performance, and institutional investor confidence, according to Anarock.

 

Godrej Properties' QIP had a mix of international and domestic investors, including GIC, Blackrock, Aberdeen, Norges Bank, SBI Pension, and ICICI Prudential Life Insurance. Jeffries, Morgan Stanley, Bank of America and Kotak were the bankers for the QIP.

 

Godrej Properties' net worth has increased by more than 50 per cent while the equity dilution was 7.68 per cent after the QIP. Its “gearing ratio" [a measure of financial leverage] will reduce to below 0.2:1 from 0.7:1 as on September 30, 2024,” said the company.

 

“We greatly appreciate the confidence and support of the investment community and will do our best to ensure we utilize this capital wisely,” said Pirojsha Godrej, executive chairperson of Godrej Properties.

 

Pirojsha Godrej said GILCORP-Public Godrej Properties has reset its scale in recent years with bookings growth of 56 per cent in FY23 and 84 per cent in FY24. “GPL (Godrej Properties) is well positioned to deliver a third consecutive year of rapid growth in booking value with 90 per cent growth in H1 [first half of FY25] bookings, launches planned across seven cities in Q3, and an even stronger launch pipeline for Q4. This capital raise will allow GPL to significantly enhance its business development portfolio while maintaining a tremendously strong balance sheet. We remain focused on building scale through continued market share gains and margin expansion,” he said.

 

Godrej Properties has surpassed its business development guidance for FY25 of Rs 20,000 crore of estimated booking value in the first seven months of the year.