Emaar prepares for Indian IPO

Emaar's Indian property unit plans to raise US$800 million (Dh2.93 billion) through a share sale that it was forced to shelve last year because of tumbling global stock markets. Emaar MGF, the Indian subsidiary of Emaar Properties, has filed the initial documents required for its planned initial public offering (IPO) to the Securities and Exchange Board of India, the company said in a statement to the Dubai Financial Market.

Emaar, which is building the world's tallest tower in Dubai, had originally hoped to raise more than $1.6bn in February last year. The planned IPO has been spurred by increased appetite among investors for new share issues as global markets show signs of stabilising. Indian stocks have rallied this quarter, rising yesterday to a 16-month high. "Investors now have more of a risk appetite," said Robert McKinnon, the head of research at Al Mal Capital, an investment bank in Dubai. "And now that things are starting to look a bit more positive, I think they're going to jump at the first opportunity to take this public."

The additional capital will help complete 29 projects Emaar MGF has under development in India, where its land reserves total about 4,600 hectares. The banks hired to lead the issue are Kotak Mahindra Capital, Deutsche Bank Equities India, UBS Securities India, Credit Suisse Securities, HSBC Securities, ICICI Securities and RBS Equities. Two other Indian developers, Sahara Prime City and Lodha Developers, also plan to sell shares to the public and have filed documents with the regulator.

They plan to develop projects in cities that include Mumbai, Delhi and Bangalore, where demand for housing has risen in recent months after prices fell as much as 30 per cent earlier this year. Oberoi Constructions, Nitesh Estates and Godrej Properties have also said they planned to launch IPOs this year. The IPO of Adani Power in July was 18 times oversubscribed, with investors putting in bids totalling Dh37.63bn.

"Recently, a lot of Indian real estate companies have been tapping the market for funds," said Ali Khan, the managing director of Arqaam Capital. "And not only for IPOs ? we've seen public companies tap the market for more funds, and they have done so at a relatively modest market discount, which highlights the healthy demand from Indian and international investors. So it's not surprising that Emaar has come back to the market for an IPO."

Emaar entered India with a joint venture partner, MGF Developments, in 2005 with plans to build mixed-use developments in Delhi, Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra. Last year, it said it would spend $12bn in India over four years, developing 500ha of residential projects, 167ha of retail and 30,000 hotel rooms. [e-mail]