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Here’s how Shriram Properties plans to use the funds from its proposed IPO

The upcoming Rs 600 crore IPO has the twin objectives of providing institutional investors a partial exit, while also getting growth funds for the company

December 06, 2021 / 12:44 PM IST

A part of the funds raised from the proposed Rs 600 crore initial public offering (IPO) of Shriram Properties, a real estate development company, will go to finance the growth of the company.

Stating this, M Murali, its Chairman and Managing Director, suggested that the worst appeared to be behind the residential real estate business, and that it had returned to pre-Covid levels.

Investor exit and growth funding

Sounding optimistic on the way forward, Murali said that the upcoming IPO had the twin objectives of providing institutional investors an exit, albeit partially, while also getting growth funds for the company.

Further, a part of the IPO money will be utilised to part-service debt.

Close

Responding to a query, Murali said he himself held close to 9 percent in the company.  The promoters, he added, hold 42 percent (including his holding).  Bengaluru-based Murali has been the face of Shriram Properties for many years now.

A part of the promoters’ holding (23 per cent) in the company is held through a welfare trust. The rest comprises holdings by employees.

Rs 250 crore fresh equity

Elaborating on the Rs 600-crore IPO, Murali said Rs 350 crore would be offered for sale (OFS) by institutional investors while the rest would be fresh equity. The four institutional investors, he said, are Walton Street, Starwood Capital, TPG Capital and Tata Capital.

Thus far, Shriram Properties has executed 35 projects involving a construction space of 47 million square feet, said Murali. The company has a pipeline of 29 projects involving a construction space of 17 million square feet, he added.

The Shriram Properties IPO comes at a time when the group itself has come out with a succession strategy. Founder R Thyagarajan last week announced the formation of a 4-member management board to guide the Shriram trust, which has become a holding company for the group.

The formation of a management board also sets at rest the succession issue, if any, at the group. Observers have opined that Shriram is a unique case where no family member of the founder is in the picture. Thyagarajan will be on hand as always to guide the group.



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KT Jagannathan is a senior journalist based in Chennai
first published: Dec 6, 2021 12:00 pm
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