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Real Estate and/or Infra Companies...

Last updated: April 21 2010
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  • Real Estate and/or Infra Companies...

    Some of you might have heard Ramesh Chandra talking about Unitech's plans to get into Infra through a demerger and listing. Something Jaypee is already working on. Given the long term value in Infra cos. I think these combos of RE + Infra companies could be the real winners in the long run (coz long term funding is easily and cheaply available for Infra but not RE)

    Residential RE is too suspectible to market cycles and just too easy for smaller players to enter and screw up the value creation process for branded players but Infra is a different ball game and isnt something all can afford to enter.

    btw, it'll be interesting to see how Jaypee Infratech's IPO goes.

    your thoughts..
  • #2

    #2

    Re : Real Estate and/or Infra Companies...

    Agree with you totally

    When is the JP IPO?
    Venky (Please read watch a or before posting)

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    • #3

      #3

      Re : Real Estate and/or Infra Companies...

      Good point cap.

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      • #4

        #4

        Re : Real Estate and/or Infra Companies...

        I think this is the strategy of transferring total non-core business's debt of around 350 cr to unitech infra.
        This is the same plan with which Nitesh Estate launching its IPO in market to meet out its outstanding debt of Rs 90 Crore and to fund their existing & new project. Other RE player like BPTP has said it plans to raise Rs 1,500 crore in the early next fiscal, Emaar MGF has Sebi approval for a Rs 3,850-crore issue, while Lodha Developers has also received approval to raise Rs 2,790 crore through an IPO offering.

        But market condition is very tough which forced Nitesh estate to drop offer price from 120-128 to 60-65, and to increase no of share to meet out the requirement of 450 Crore. Appetite for real estate IPOs or public issues has shrunk dramatically among investors, especially after the 2008/09 meltdown. Two recent realty IPOs got a lukewarm reception from the market, forcing investors to be wary.

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        • #5

          #5

          Re : Real Estate and/or Infra Companies...

          Originally posted by Bipin View Post
          I think this is the strategy of transferring total non-core business's debt of around 350 cr to unitech infra.
          This is the same plan with which Nitesh Estate launching its IPO in market to meet out its outstanding debt of Rs 90 Crore and to fund their existing & new project. Other RE player like BPTP has said it plans to raise Rs 1,500 crore in the early next fiscal, Emaar MGF has Sebi approval for a Rs 3,850-crore issue, while Lodha Developers has also received approval to raise Rs 2,790 crore through an IPO offering.

          But market condition is very tough which forced Nitesh estate to drop offer price from 120-128 to 60-65, and to increase no of share to meet out the requirement of 450 Crore. Appetite for real estate IPOs or public issues has shrunk dramatically among investors, especially after the 2008/09 meltdown. Two recent realty IPOs got a lukewarm reception from the market, forcing investors to be wary.
          Bipin - you've answered your question yourself. All these are pure play RE players. So, market is not really valuing them so much because of the 08-09 experience. This is the cycle from which the Infra players are trying to get out of.

          & btw, 360 cr of debt (whether core or non-core) is almost peanuts for a Unitech sized company. They sold off the Marriott property in gurgaon for around that amount. So, I dont think its a prime driver behind this move.

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