Macrotech Developers, formerly known as Lodha Developers, will open its initial public offering on April 7. This would be the first IPO in the financial year 2021-22.
This is the third attempt of the Mumbai-based real estate developer to launch an IPO after deferring its plans in 2009 and 2018 due to unfavourable market conditions.
Axis Capital, JP Morgan India, Kotak Mahindra Capital Company are the global coordinators and book-running lead managers to the issue. ICICI Securities, Edelweiss Financial Services, IIFL Securities, JM Financial, YES Securities (India), SBI Capital Markets and BOB Capital Markets are the book-running lead managers to the issue.
Here are 10 key things to know before subscribing the public issue:
1) IPO Dates
The maiden public offer will open for subscription on April 7 and will close on April 9. The anchor book will open for bidding for a day on April 6.
2) Price Band
The price band for the offer has been fixed at Rs 483-486 per equity share.
3) Public Issue
The IPO is a fresh issuance of Rs 2,500 crore. The fresh issue includes a reservation of equity shares of Rs 30 crore to its employees.
50 percent of the IPO portion is reserved for qualified institutional buyers, 15 percent for non-institutional bidders and 35 percent for retail investors.
Investors can bid for a minimum of 30 equity shares and in multiples of 30 equity shares thereafter.
4) Objects of Issue
The company will utilise the net proceeds from the fresh issue for repaying a debt of Rs 1,500 crore, and acquisition of land or land developmental rights of Rs 375 crore.
5) Company Profile
Incorporated in 1995, Macrotech Developers commenced operations in Mumbai, developing affordable housing projects in the suburbs of Mumbai, and later diversified into other segments and regions in the MMR and Pune.
As of December 2020, it has 91 completed projects comprising approximately 77.22 million square feet of developable area, of which 59.13 million square feet is in affordable and mid-income housing, 12.15 million square feet is in premium and luxury housing. Also, 5.21 million square feet is in office space and 0.74 million square feet is in retail space.
The company is amongst the largest real estate developers in India by residential sales value for the FY14-FY20. It has 54 ongoing and planned projects having approximately 73.8 million square feet of developable area.
Its core business is residential real estate developments with a focus on affordable and mid-income housing. In 2019, Macrotech Developer forayed into the development of logistics and industrial parks and entered into a joint venture with ESR Mumbai 3 Pte Limited, a subsidiary of ESR Cayman, an Asia Pacific-focused logistics real estate platform.
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6) Competitive Strengths
Macrotech believes that it is well-positioned to exploit the growth opportunities in the Indian real estate market. Its key competitive strengths are set out below:
a) It is one of India’s largest residential real estate developers with a leadership position in the attractive MMR market.
b) It is a well-established brand with the ability to sell at premium pricing and throughout the construction phase.
c) It has proven end-to-end execution capabilities with continuous innovation and the ability to deliver projects at a competitive cost.
d) The company follows a comprehensive approach to sustainable development from an early design phase through the construction period.
e) It is a highly diversified portfolio across price points and micro-markets in the MMR with a focus on affordable and mid-income housing.
f) It has a significant inventory of completed, ready-to-move units.
g) It has the unique ability to develop townships and generate recurring operating cash flows from them.
h) The company has innovative marketing and sales strategies.
i) It has a high-quality management team.
The following are the key elements of its business strategy:
a) The company intends to focus on enhancing leadership position in residential developments by growing in the MMR and gradually diversifying in select tier-I Indian cities.
b) It intends to leverage leadership position to act as a partner of choice for landowners and grow using a joint development or joint venture approach.
c) It intends to pursue a value-accretive land acquisition strategy.
d) It has planned to develop a logistics and industrial park of over 800 acres near Palava, which is strategically located near the Jawaharlal Nehru Port, the proposed international airport in Navi Mumbai and the industrial hub of Taloja.
e) It intends to focus on the development of commercial projects as part of mixed-use developments.
Lodha developers reported a loss of Rs 264.3 crore for the nine months period ended December 2020, against a profit of Rs 503 crore in the corresponding period. Revenue fell to Rs 2,915 crore, from Rs 9,272.9 crore in the same period impacted by the COVID-19 crisis.
The company reported a profit of Rs 744.84 crore for the financial year FY20, down 54.7 percent compared to Rs 1,643.97 crore in the previous year. Revenue increased 4.5 percent to Rs 12,442.6 crore compared to the previous year.
The company has a debt of Rs 18,662.18 crore as of December 2020.
Its peers are Brigade Enterprises, DLF, Godrej Properties, Oberoi Realty, Prestige Estates Projects, Sobha and Sunteck Realty.
9) Promoters and Management
Its promoters are Abhishek Mangal Prabhat Lodha, Rajendra Narpatmal Lodha, Sambhavnath Infrabuild and Sambhavnath Trust. Promoters hold 39,58,78,000 equity shares in the company, representing 100 percent of the paid-up equity share capital.
Mukund Manohar Chitale is an Independent Director and Chairman of the company. He has nearly 43 years of experience as a practising Chartered Accountant. He was a member of the Advisory Board on Bank, Commercial and Financial Frauds of the Central Vigilance Commission. He was a member of the Working Group on Restructuring of Weak Public Sector Banks appointed by RBI (Verma Committee) and the Committee on Procedures and Performance Audit of Public Services appointed by RBI (Dr Tarapore Committee). He was also appointed as the chairman of the National Advisory Committee on Accounting Standards.
Abhishek Mangal Prabhat Lodha is the Managing Director and Chief Executive Officer of the company. He has 19 years of experience in strategy, design, project management, construction, corporate planning, legal and brand communication. Prior to joining the company, he worked as a business analyst with McKinsey & Company, Atlanta, United States.
Rajendra Narpatmal Lodha and Raunika Malhotra are Whole-Time Directors on the board, while Rajinder Pal Singh is the Non-Executive and Non-Independent Director. Ashwani Kumar is an Independent Director.
Sushil Kumar Modi is the Chief Financial Officer of the company. He is a qualified Chartered Accountant, Chartered Financial Analyst, Company Secretary and a Cost and Works Accountant. Prior to joining the company, he was associated with the GMR group, where he was the Group CFO – Strategic Finance. He has also worked with the Aditya Birla Group and JSW Steel.
10) Share Allotment, Refunds and Listing
The company in consultation with merchant bankers will finalise the IPO share allotment around April 16 and the funds will be refunded around April 19.Equity shares will get credited to eligible investors' demat accounts around April 20 and the trading in shares will commence from April 22, as per the schedule available in the prospectus.