Cranes rise above the construction site of Lodha The Park, a luxury residential project developed by Lodha Developers Ltd., in Mumbai. Photographer: Dhiraj Singh/Bloomberg 

Lodha Developers To Use Most Of IPO Proceeds To Repay Debt

Mumbai-based Lodha Developers Ltd. will use most of the funds it plans to raise from its Rs 5,500-crore initial public offering to retire debt.

Currently, the maker of luxury homes has a cumulative debt of nearly Rs 18,000 crore, its Managing Director and Chief Executive Officer Abhishek Lodha told BloombergQuint in an interview. Of the 5,500 crore the company plans to raise from the market, Rs 4,500 crore will go towards debt repayment. “The remaining debt will be reduced using the rental income from our commercial arm in the next 2-3 years,” Lodha said.

The developer received the Securities and Exchange Board of India’s nod to launch what could possibly be India’s second-biggest initial public offering in the real-estate sector. The biggest Indian IPO in the sector was by DLF, which raised close to Rs 9,200 crore in 2007.

The firm plans to issue fresh shares worth Rs 3,750 crore besides an offer-for-sale of 1.8 crore shares by its promoters. It aims to raise about Rs 750 crore out of the proposed issue through a pre-IPO placement of 95 lakh fresh shares.

The developer had previously filed papers with the SEBI in 2009 for the IPO but had to shelve the plans due to unfavourable market conditions and the global financial crisis.