Puravankara planning $100-mn QIP as real estate firms tap markets for funding growth, reduce debt

Purvankara plans to use the funds for both organic and inorganic growth opportunities, and will spend the money on capex and for reducing debt.

Bengaluru-based real estate developer Puravankara Limited is gearing up to launch a qualified institutional placement (QIP) that will see the company raise as much as Rs 700-800 crore, said sources aware of the company’s plans.

Founded in 1975, the company has three prominent brands – Purva, Provident Housing and Purva Land. As of March 31, 2024, Puravankara has delivered 86 residential and commercial projects measuring around 50 million square feet. The company has a land bank of over 36 million square feet and over 23,000 homes with a total area of over 31 million square feet under development. It has also recently forayed into the redevelopment space in Mumbai by securing the rights for two housing societies spread over three acres with a potential gross development value of Rs 1,500 crore.

“Puravankara has picked ICICI Securities as one of its advisors for the QIP and they will add one or two more banks. The company is awaiting shareholder nod for its fundraise plans, which will come in the next few days, but the deal launch is most likely to happen next month, after the union budget,” said one of the sources.

The real estate developer plans to use the funds for both organic and inorganic growth opportunities, and will spend the money on capex and for reducing debt.

Puravankara’s net debt stood at Rs 2,151 crore as of March 31, rising from a net debt of Rs 1,741 crore at the end of the previous quarter.

Puravankara is currently seeking shareholder approval for plans to raise up to Rs 1,000 crore through a postal ballot, which ends on July 14.

An email sent to Purvankara did not elicit a response.

If Puravankara goes through with its QIP, it will be the fifth company from the real estate sector to tap the stock markets to raise equity.

Mumbai-based real estate developers have led the charge in 2024, with Lodha Group (Macrotech Developers Ltd) raising Rs 3,300 crore through its QIP in March. In the same month, Mumbai developer D B Realty raised Rs 920 crore through its QIP, while another Mumbai developer Rustomjee (Keystone Realtors Ltd) raised Rs 800 in its QIP in May.

Real estate construction firm Capacit’e Infraprojects raised Rs 200 crore from its QIP in January.

Most of these QIPs were aimed at raising growth capital and to reduce debt on the balance sheet of these companies, reflecting a change in real estate companies' dependence on debt and alternative sources of capital funded growth of the past. The spate of QIPs from the real estate sector also reflects investor confidence in the real estate sector's growth prospects.

Moneycontrol reported on June 28 that sales and new supply witnessed a growth of 8 percent and 11 percent year-on-year (YoY), respectively, across eight major cities in the country, as per a report by PropTiger.com, driven by real-estate markets in western India, with Pune, Mumbai, and Ahmedabad taking up a 61 percent share in Q2 of CY2023.

Calendar year 2024 has been an active year for corporate fundraising through the QIP route with 37 companies raising Rs 32,527 crore in the first six months of the calendar year, compared to 45 companies raising Rs 52,349 crore in the entire calendar year 2023, as per data from primary market tracker Prime Database.