Indiabulls Real Estate REIT Float Faces Challenges in Singapore
Extension Announced Due to Poor Retail Investor Response
MUMBAI: In a setback for Indian real estate developers seeking to raise capital through Real Estate Investment Trusts (REITs) in Singapore, Indiabulls Real Estate has announced an extension for its REIT float. The decision comes after a lukewarm response from retail investors.
Initial Public Offering (IPO) Details
- Initial Closure Date: June 5th
- Extended Closure Date: June 6th
- Target Amount: $286 million
- Offered Yield: 9.8%
Response to the IPO
Despite the extension, Ajit Mittal, CEO of Indiabulls Properties, remained optimistic, stating that the issue has been oversubscribed. However, this assertion contradicts reports suggesting that the company failed to sell the mandatory minimum 1,000 units, managing only about one-third of this target.
'We are extending it because merchant bankers said many retail investors from Malaysia, Indonesia, and nearby countries want to invest.' - Ajit Mittal, CEO of Indiabulls Properties.
Institutional Interest
On a more positive note, the institutional portion of the issue saw significant interest, with an oversubscription of 1.8 times. Notable investors include Lakshmi Niwas Mittal, who has purchased 91 million shares, with Merrill Lynch and Deutsche Bank AG acting as book runners.
Market Analyst Insights
- Delicate Market Conditions: David Lum, analyst at Daiwa Institute of Research Singapore, highlighted the cautious approach of issuers in the current market, emphasizing the need for the subprime situation to stabilize.
- Apprehensions Over Indiabulls' Listing: Sandeep Mathew, analyst at BNP Paribas India Solutions, expressed concerns over Indiabulls' decision to list its Elphinstone and Jupiter Mills properties (3.4 million sq ft in Lower Parel) in the current market conditions, suggesting it may be more about returning cash to promoters.
Background
This development follows Unitech's decision to pull its plans for a $700 million REIT listing, underlining the challenges faced by Indian real estate companies in securing investment through this route in Singapore.