Godrej Properties Raises Rs 6000 Crore Through QIP, Logs Demand 4 Times Issue Size

Godrej Properties has successfully raised Rs 6,000 crore through a qualified institutional placement (QIP), marking the largest such fund-raise by an Indian real estate company. The proceeds will be used for a pipeline of projects, with demand four times

Godrej PropertiesQipReal EstateFundraisingInvestor ConfidenceReal Estate NewsDec 03, 2024

Godrej Properties Raises Rs 6000 Crore Through QIP, Logs Demand 4 Times Issue Size

Real Estate News:Godrej Properties, a leading real estate developer in India, has raised Rs 6,000 crore through a Qualified Institutional Placement (QIP). This fund-raise is the largest ever by an Indian real estate company, reflecting strong investor confidence in the company's future prospects and the overall recovery of the real estate sector post-pandemic.The proceeds from the QIP will be utilized to support a pipeline of projects, enhancing Godrej Properties’ growth trajectory. The company reported that the demand for the QIP was four times the issue size, indicating robust investor interest and a positive market outlook.Several other major real estate developers in India, such as Macrotech Developers (also known as Lodha Group), Prestige Estates, Brigade Enterprises, and Keystone Realtors, have also used QIPs to raise significant capital. In the first nine months of 2024, these developers collectively raised Rs 13,002 crore through QIPs. On November 14, 2024, Oberoi Realty received shareholder approval to raise around Rs 6,000 crore through a QIP.QIPs are a popular fundraising mechanism in the real estate sector due to their transparency and the strong recovery of the market. According to Anarock, the real estate industry is experiencing a surge in residential sales value, bolstered by the performance of the Nifty realty index and institutional investor confidence.Godrej Properties' QIP attracted a diverse mix of international and domestic investors, including GIC, Blackrock, Aberdeen, Norges Bank, SBI Pension, and ICICI Prudential Life Insurance. The investment banking firms Jeffries, Morgan Stanley, Bank of America, and Kotak managed the QIP process.The QIP has significantly enhanced Godrej Properties' financial health. The company’s net worth has increased by more than 50 per cent, while equity dilution was only 7.68 per cent. The company's gearing ratio, a measure of financial leverage, is expected to reduce to below 0.2 1 from 0.7 1 as of September 30, 2024.Pirojsha Godrej, the executive chairperson of Godrej Properties, expressed gratitude for the investment community’s support. “We greatly appreciate the confidence and support of the investment community and will do our best to ensure we utilize this capital wisely,” he said.Godrej Properties has seen significant growth in recent years. The company has reset its scale with bookings growth of 56 per cent in FY23 and 84 per cent in FY24. “GPL (Godrej Properties) is well positioned to deliver a third consecutive year of rapid growth in booking value with 90 per cent growth in H1 [first half of FY25] bookings, launches planned across seven cities in Q3, and an even stronger launch pipeline for Q4. This capital raise will allow GPL to significantly enhance its business development portfolio while maintaining a tremendously strong balance sheet. We remain focused on building scale through continued market share gains and margin expansion,” Pirojsha Godrej added.Godrej Properties has already surpassed its business development guidance for FY25, achieving an estimated booking value of Rs 20,000 crore in the first seven months of the year. This robust performance underscores the company’s commitment to strategic growth and financial prudence.

Frequently Asked Questions

What is a Qualified Institutional Placement (QIP)?

A Qualified Institutional Placement (QIP) is a fundraising mechanism used by listed companies in India to issue equity shares, convertible securities, or any other security convertible into equity shares to a select group of investors, including mutual funds, insurance companies, and other institutional investors.

How much did Godrej Properties raise through its QIP?

Godrej Properties raised Rs 6,000 crore through its Qualified Institutional Placement (QIP).

What will Godrej Properties use the QIP proceeds for?

Godrej Properties will use the proceeds from the QIP to support a pipeline of projects, enhance its business development portfolio, and maintain a strong balance sheet.

How did the market respond to Godrej Properties' QIP?

The demand for Godrej Properties' QIP was four times the issue size, indicating strong investor confidence and a positive market outlook.

Who are some of the investors in Godrej Properties' QIP?

Godrej Properties' QIP attracted a diverse mix of international and domestic investors, including GIC, Blackrock, Aberdeen, Norges Bank, SBI Pension, and ICICI Prudential Life Insurance.

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