Posted By: Mark Thatcher

By Joe Leahy in Mumbai

Indian property developers are seeking to raise up to $4bn through domestic and international share offerings by the end of the first quarter of 2007 in a flurry of listings that will see the effective birth of a listed property sector in the country.
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The capital raisings will open up what was until recently one of India's most fragmented and untransparent sectors.

"It's almost like you're seeing the birth of a completely new sector," said Manish Chokhani, managing director at Enam Financial Consultants, an investment firm advising on some of the offerings.

The listings include what is expected to be the country's largest initial public offering, an estimated $2bn-$2.5bn share issue by Delhi-based developer DLF, as well as a $350-$500m offering from Omaxe, another north India developer, and several other offerings by blue chips.

The Indian property sector has traditionally been under-represented on the stock exchange, with existing property stocks accounting for just a few per cent of the total market capitalisation of nearly $700bn.

But the rapid growth of India's IT sector is driving investment in office buildings while a boom in consumer finance and retailing has spawned the development of new townships and malls across the country.

The entry of greater foreign direct investment following regulatory changes last year has also brought the sector into the international spotlight.

Enam expects the Indian real estate industry, estimated to have turnover of about $12bn last year, to be worth $50bn by 2010, implying a compound annual growth rate of 33 per cent.

Many worry that the sector could be over-heating. The stock price of the largest existing listed developer, Unitech, has soared on pent-up demand for such stocks.

The central bank also increased one of its benchmark interest rates last month in a move aimed at slowing bank lending.

Investment bankers argue there is immense investor appetite for real estate paper. In the $220m IPO of Parsvnath Developers, a medium-sized Indian real estate company, investors have applied to buy the equivalent of 62 times the shares on offer.

Aside from Parsvnath, DLF and Omaxe, other expected Indian stock market offerings include the $120m IPO of Sobha Developers, a contractor for Infosys Technologies, India's second largest computer services company, and an expected $100m offering by Akruti Nirman, a developer specialising in slum rehabilitation.

Other large capital-raisings by Indian developers include a planned £180m listing by Ishaan Real Estate, a company backed by Mumbai developer K Raheja, on London's Alternative Investment Market.

DLF had filed earlier this year but its IPO was scuppered by objections from minority shareholders concerned they were not receiving a fair deal from the offering.

It is expected to hold an extraordinary general meeting on Tuesday to approve a new deal with the minority investors and refile its offering documents in the coming weeks with the regulator.

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