VBHC Value Homes (formerly known as Value & Budget Housing Corporation) now plans to launch its IPO sometime during April – May 2018, according to a report by Business Standard. When launched, VBHC IPO will mobilize at least INR1,000 crore (INR10 billion) for expanding the company’s operations in India and to offer exit to some of its investors. The Bengaluru-based company, started by Jaithirth Rao and P S Jayakumar, was earlier looking to launch the share sale this year but has deferred the plans now that the sentiments in the real estate industry are not positive following the recent policy changes.
“After demonetisation, investors have disappeared. Only some are investing now, in the hope of capital appreciation. In Bengaluru, it is mostly end-users. After Rera, the wait and watch is ending and people have more confidence to buy. In GST, there is still some confusion left but I hope that will be cleared soon,” said Rao who added that he would like to see the March 2018 numbers and take a call.
The affordable home developer, which has its focus on the INR16-40 lakh (INR1.6-4 million) price bracket, counts several prominent names among its investors. The list includes Japan’s real estate major Daiwa House Group, Caspian Investment Advisors, The Carlyle Group, International Finance Corporation (IFC), Tano Capital and HDFC Bank.
Rao added that the funds from a couple of investors will be exhausted in 2019 but added that no investor is pressurizing for an exit. External investors hold over 60% equity stake in the company.
Real Estate under pressure
Considering the poor sentiment towards real estate companies, the delay in VBHC IPO isn’t surprising even though the company is among the better managed players. Margins of real estate companies are under pressure as the sector is deprived of liquidity amid few end users and massive unsold inventories. Couple of years back, Pune-based Paranjape Schemes filed prospectus for IPO but the company let the SEBI approval lapse in January 2017 after realizing that the time was not right for a real estate IPO.