According to people familiar with the fixed-price offering, the order book was well oversubscribed at the end of the one-week roadshow with a good mix of primarily Asian and European investors. This was despite the fact that the investment company is focusing on yet to be developed real estate, in particularly IT parks and special economic zone projects, and wonÆt be generating any return for another three years at least.
ôInvestors were attracted to the theme of Indian development and the scarcity of retail property and offices in prime locations,ö one source says of the strong demand.
The stock gained as much 20% when it started trading on a conditional basis on LondonÆs Alternative Investment Market yesterday, before retreating slightly to around the 116 pence level û up 16% from the IPO price. The formal trading debut is scheduled for November 24.
Ishaan will have an initial portfolio of eight property assets that will be majority owned and developed by K Raheja Corp, one of IndiaÆs leading real estate developers, which will offer exposure across a variety of geographies and sectors in India.
In a statement issued Monday, Ishaan said it will use approximately 78% of the ú171.1 million in net proceeds to pay for the acquisition of the eight initial assets. The company will hold 40% and K Raheja the remaining 60% in these projects. It intends to use another ú20 million to make further investments.
The IPO, which was jointly arranged by Deutsche Bank and JPMorgan Cazenove, comprised 180 million shares that were sold at ú1 apiece. There is also an overallotment option of another 27 million shares, or 15% of the initial deal size, that may be issued in case of strong demand in the secondary market too. Together these shares comprise close to 100% of the companyÆs issued share capital.
The company's eight identified projects are based in or around the cities of Hyderabad, Mumbai, Bangalore and Pune and have total asset value of ú445.5 million ($851 million), as estimated by independent valuers Cushman & Wakefield. They have a planned built floor area of 15.3 million square feet.
IshaanÆs trading debut comes as Sobha Developers is in the market trying to raise up to $114 million. Other property developers in the pipeline include Akruti Nirman, which is expected to raise around $75 million, and DLF Universal, which may target as much as $2 billion.
Last week, Parsvnath Developers priced its $222 million IPO at the top of the indicated range after the offer was 61 times covered.
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