Emaar to Repay Debt Through Fund Raised from IPO

October 3, 2009	(Be the first to rate this story!)  Loading ...
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Real estate firm Emaar MGF will use nearly half of the funds raised from its initial public offering (IPO) to repay debt and strengthen the company’s balance sheet. The company plans to raise Rs 3,850 crore through its maiden flotation. “To deleverage its balance sheet, the company intends to repay Rs 1,772.6 crore of its outstanding debt from the proceeds of the fresh issue,” the company said in its draft red herring prospectus. The realty major had filed its draft prospectus with market regulator Sebi on September 29.

A joint venture between Dubai-based Emaar Properties and India’s MGF, the company has a debt of Rs 5,807.79 crore as on August 31 and plans to utilise Rs 1,972.1 crore raised from the public offer to repay some of the debt. The repayment will also include the debt of Emaar MGF Construction, a special purpose vehicle created to build villages for the Commonwealth Games in Delhi.

Lenders to the company include Unit Trust of India Mutual, HDFC, L&T Infrastructure Finance Company, Axis Bank, LIC, Citibank, ABN Amro Bank, HSBC and the SBI. “The company proposes to use up to Rs 199.5 crore to fund Emaar MGF Construction (the SPV),” Emaar MGF said in its prospectus.

Besides, the realty firm would use Rs 820 crore for the redemption of certain redeemable preference shares. It would also invest Rs 276.8 crore in development and to meet licence renewal charges. The remaining part of the proceeds will be spent on general corporate purposes, including acquisition and brand building exercise. This is the second time that Emaar MGF has filed its draft prospectus with Sebi to raise money from the capital market.

Last year it had approached the market regulator to raise over Rs 7,000 crore year through an initial public offering. However it had to withdraw the flotation because of poor market response, even after revising the price band downward after the offer.

Emaar MGF commenced its operations in the country in 2005. As on August 31, 2009, the company has a land bank of 11,340 acres. It has 29 projects, comprising saleable area of 26.3 million sq ft, under various stages of development. The book running lead managers to the issue are Kotak Mahindra Capital, Deutsche Equities India, UBS Securities India, Credit Suisse Securities, HSBC Securities, ICICI Securities and RBS Equities.

News Published Under:   Real Estate Developers |

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