Parsvnath Developers, the Delhi-based real estate developer, is open for subscription with an initial public offer, IPO to raise up to Rs 1,000 crore (Rs 10 billion).

The issue closes on November 10, 2006. The issue constitutes 18.30% fully diluted post-issue paid-up capital and the price band has been fixed between Rs 250 and Rs 300.
 
The issue comprises a net issue to the public of up to 3,30,38,000 equity shares and a reservation of up to 2,00,000 equity shares for subscription by employees.

The book running lead managers to the issue are Enam Financial Consultants, JM Morgan Stanley Financial Services and DSP Merrill Lynch.  Intime Spectrum Registry is the registrar to the issue.

The ASK Raymond James report on Parsvnath Developers IPO:

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Parsvnath Developers, PDL, one of the leading developers in the USD 30 billion real estate industry with a pan India presence. The company has completed nine housing and eight commercial projects spread over 3.5 million sq ft till date. PDL currently has development rights for an estimated 108.6 million sq ft of saleable area spread across 90 projects with an estimated cost of about Rs 132 billion.

These projects include residential, commercial, integrated townships, hotels and IT parks located across 41 cities in 14 states. PDL has diversified its portfolio by undertaking the development of 11 BOT projects (DMRC - Delhi Metro Railway Corporation) and 15 SEZ's. The company expects to complete the development of the aforementioned 108.6 million sq ft over the next 5 years.

Highlights

Diversified portfolio of projects mitigates risks

PDL has de-risked its business model by building a diversified project portfolio. The company has diversified its focus from the residential and commercial developments to further include IT parks, SEZ's and BOT projects (DMRC). Thus it provides a good base to tackle the real estate cycle through the multiple revenue streams. PDL would retain about 20-30% of its commercial developments for rental income. In addition, the 11 DMRC stations are expected to earn Rs 2.6 billion of rental income from FY09E onwards. Thus these annuity streams of incomes differentiate PDL from the other developers, who are largely dependent on the property cycles.

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Other Highlights

Risk & concerns

Valuation