The initial public offering (IPO) of Lavasa Corporation – the realty subsidiary of engineering firm Hindustan Construction Company (HCC) – seems to be delayed again as the validity of Securities and Exchange Board of India (SEBI) observation is set to lapse on 6 November. The realty firm was planning to raise INR750 crore (INR7.5 billion) during July-September 2015, according to earlier reports but there has been no announcement in this regard so far. With the one year validity of the observation about to lapse, the company will need to again file a draft prospectus and secure a fresh observation in order to launch IPO.
A report in Financial Express also cited a senior investment banker saying that the company is unlikely to file the prospectus again with SEBI anytime soon. “The company wants to wait for two-three years as the IPO is unlikely to get subscribed at the current valuations. Further, Hindustan Construction, which is Lavasa’s parent company, recently raised money through institutional private placement, and it is unlikely to raise any further money as of now,” said the unnamed investment banker.
This is the second time Lavasa IPO has been postponed. In July 2014, the Ajit Gulabchand-promoted company had filed draft papers with SEBI to raise INR750 crore through IPO and was cleared on 7 November. This was HCC’s second effort to hit the capital market. Prior to that, Lavasa had got market regulator SEBI’s clearance in November 2010 to raise up to INR2,000 crore (INR20 billion) but bad market conditions forced the company to scrap the plans.
While the IPO market has seen increased activity this year with 16 IPOs so far, the realty sector has lagged in the participation. However, this is hardly surprising as Lavasa IPO was one of the two public issues in the fray. The other realty company in the race to raise public funds is Paranjape Schemes which filed paperwork with the market regulator in July.