Signature Global to float its IPO on Sept 20 to mop up Rs 730 crore

Signature Global IPO opens on September 20

Real estate developer Signature Global (India) will float its public issue on September 20 to raise Rs 730 crore. The price band will be announced in the coming days.

The IPO of the International Finance Corporation-backed affordable housing company will consist of fresh shares worth Rs 603 crore from the company and an offer-for-sale (OFS) of Rs 127 crore from the International Finance Corporation (IFC).

The offer will close on September 22. The issue size has been reduced at the time of filing the draft IPO papers from Rs 1,000 crore in July last year.

Public shareholders

IFC held 5.38 percent in the company. The outstanding compulsory convertible debentures (CCDs) that had been issued to the IFC as well as HDFC Capital Affordable Real Estate Fund 1 (HCARE) were converted by the company into equity shares prior to filing of the draft red herring prospectus with the RoC which will improve the company's debt-equity ratio.

HCARE holds 3.5 percent stake in Signature. Hence, there are no outstanding CCDs now.

Also read: TPG to cut stake at RR Kabel via IPO, poised for 4x return on investment

Use of issue proceeds

The company that claimed to be the largest real estate development company in the National Capital Region of Delhi (Delhi NCR) in the affordable and lower mid-segment housing, plans to use the net fresh issue proceeds for repaying debts amounting to Rs 432 crore, while the rest will be used for inorganic growth through land acquisitions and general corporate purposes.

As of June 2023, the outstanding loans on the books of the company were Rs 495.26 crore and its four subsidiaries at Rs 123.86 crore.

Up to 75 percent of the issue size has been reserved for qualified institutional buyers (QIB), and up to 60 percent of it is reserved for anchor investors who can books shares on September 18. The remaining 15 percent of the issue size is reserved for high net-worth individuals and 10 percent for retail investors.

Also read: RR Kabel mops up Rs 585.62 crore from anchor investors ahead of IPO

The company

Since the commencement of its operations in 2014, the company has sold 27,965 residential and commercial units, all within the Delhi NCR region - a total saleable area of 18.90 million square feet as of March FY23. Its sales (net of cancellation) have grown at a compounded annual growth rate (CAGR) of 42.46 percent during FY21-FY23 to Rs 3,430.6 crore.

Most of its completed projects, ongoing projects and forthcoming projects are located in Gurugram and Sohna in Haryana, with 88.49 percent of the saleable area located in this region as of March FY23, and almost all of its projects have been undertaken under the AHP (Affordable Housing Policy) or the DDJAY - APHP (Deen Dayal Jan Awas Yojana - Affordable Plotted Housing Policy.

Also read: Updater Services gets Sebi nod to go ahead with IPO plans

Financials furnished in the draft IPO papers show that the company recorded a consolidated net loss of Rs 63.7 crore for the year ended March FY23, narrowing it down from Rs 115.5 crore a year back, but its consolidated revenue from operations remained strong at Rs 1,553.6, increasing sharply from Rs 901.3 crore.

Promoters hold 78.36 percent shares in Signature Global and the remaining 21.64 percent is held by public shareholders, including IFC, HCAR, DKL Broking & Infra LLP, and Credible Nivesh.

ICICI Securities, Axis Capital, and Kotak Mahindra Capital Company are the merchant bankers to the issue, while Link Intime India is the registrar to the offer.