REALITY IPOs ARE NOT

CLICKING
 A CLUTCH OF
REALTY IPOs
HANGS FIRE LOSE
THEIR APPETITE
FOR THE
UNDERPERFORMI
NG SECTOR.
 AGENDA
 INTRODUCTION TO IPOs AND REALITY IPOS
 RECESSION Vs. REALITY IPO
 REASONS OF FAILURES OF REALITY IPOs
 CHALLENGES FACED BY REALITY IPOs
 RESULTS OF FAILURES
 FACTS AND FIGURES
 HOW THE DEVELOPERS ARE HANDLING THE
DEBTS
 WILL UPCOMING REALITY IPOs WILL
SUCCEED
 SOLUTION
 SUMMARY
 IPOs & REALITY IPOs

 INITIAL PUBLIC OFFERING(IPO) SIMPLY MEANS A

PROCESS OF SELLING STOCKS TO THE FOR THE FIRST
TIME TO RAISE MONEY.

 IPOs WHICH ARE ISSUED BY THE REAL ESTATE

COMPANIES FOR THE FIRST TIME TO THE PUBLIC ARE
CALLED REALITY IPOs
 RECESSION Vs. REALITY
IPOs
REAL ESTATE SECTOR HASN’T QUITE RECOVERED FROM THE CRASH OF 2008.
DECLINE IN REAL ESTATE SALES EVENTUALLY
LEADS TO THE DECLINE IN REAL ESTATE PRICE.
THIS REDUCE THE VALUE OF EVERYONE’S HOME
THAT REDUCE THE STOCK PRICE OF REAL ESTATE.
THE TARGETS OF INVESTMENT S FROM INVESTORS
WERE LOWER.
REAL ESTATE COMPANYS ARE STUCK WITH HIGHER
DEBTS AND INVENTORY ON THEIR BOOKS.
INVESTORS WERE NOT SEEN IN STRONG
NUMBERS.THEIR TARGETED AMOUNT WERE LOWER.
THEY MADE FURTHER PUBLIC ISSUE FOR THE REPAYMENT OF
THEIR DEBT.
THEY SOLD THEIR RESIDENTIAL STOCK , LAND BANKS IN
HUGE DISCOUNTS.
 CHALLENGES FACED BY
REALITY IPOs
RECOVERING FROM 2008 ECONOMIC FINANCIAL CRISIS

THE BSE REALITY INDEX UNDERPERFORMED THE SENSEX BY A LONG WAY

ONLY GAINING 32% IN THE PAST ONE-AND-A-HALF YEAR.

30 SHARE SENSEX DIDN’T EVEN GAIN 0.8%

PLUNGING DOWN OF INDEX BY 17%

NONE OF THE COMPANY OVER THE PAST THREE YEARS HAVE TRADED
OVER THEIR OFFER PRICE.

RECOVERY FROM THEIR DEBTS

ENTRY OF THE NEW REAL ESTATE COMPANIES

TO MAKE INVESTORS BELIEVE IN REALITY IPOs
TIGHTNING BY RBI& SEBI GUIDELINES
 REASONS OF FAILURES
UNDERPERFORMANCE IN BSE STOCK EXCHANGE.

ECONOMIC CRASH

NON ALLOWANCE OF DIRECT INVESTMENTS IN

EQUITY BY NRIs

GEOGRAPHICAL RESTRICTION

POOR LAND RECORDS

UNREALISTIC PRICE HIKE

UNETHICAL PRACTICES
 FACTS AND FIGURES
DLF, THE COUNTRY’S LARGEST REALTOR WAS QUOTED BELOW Rs. 290, SOME 45%
BELOW ITS OFFER OF Rs 525.
NITISH ESTATES, TRADED AT 40% DISCOUNT
GODREJ PROPERTY WERE QUOTED BELOW THEIR OFFER PRICE
16 REAL ESTATE COMPANIES THAT ARE KEEN TO TRAP THE IPOs MARKET TO
COLLECTIVELY RAISE Rs 18000-20000 CRORE, BUT THE INVESTORS ARE IN NO MOOD
TO COME CLOSE
THE BROKERAGE WHO GOT A TARGET OF Rs 1000 FOR DLF HAVE LOWERED THE
TARGETS TO Rs 300-450
NARAYAN SAHA WITH OTHER PROMOTERS WHO ARE WAITING TO TRAP THE
PRIMARY MARKET OF REAL ESTATE.
MUMBAI BASED
NEPTUNE GROUP HAD MADE A DEBT OF Rs 141 CRORES AT THE END OF JUNE 2009.
NEPTUNE DEVELOPERS WANTED TO MAKE PUBLIC ISSUE TO REPAY A PART OF THE
SUBSIDIARY LOAN TO THE EXTEND OF 37.5 CRORES.
SELLING THE LAND BANKS & RESIDENTIAL STOCKS AT A HUGE DISCOUNT TO PICK
THE PRICES, WHICH IS ONE OF THE ORTHODOX METHOD ADOPTING
HOW DEVELOPERS HANDLING DEBTS

SEVEN REAL ESTATE COMPANIES INCLUDING

DLF, HDIL, OMAXE, AND IBR PRIME, HAVE HEAT
THE CAPITAL MARKET.
 AROUND 10 MORE REALITY COMPANY ARE
PLANNING TO COME UP WITH THEIR IPO’S SOON.
 NEARLY Rs 11,665 CRORES WERE TO BE RAISED
BY THE ABOVE MENTIONED 4 REAL ESTATE
COMPANIES RAISE THROUGH IPOs TO PAY DEBTS.
 DEVELOPERS HAVE ANNOUNCED PLANS TO
RAISE A LARGE AMOUNT OF CAPITAL FROM
PRIMARY MARKET FOR ISSUING OF EQUITY
SHARES
 WILL REALITY IPOs SUCCEED
 SUCCESS OF UPCOMING IPOs DEPENDS
COMPLETELY ON PREVELANT MARKET SCENARIO.
 RECESSIONS ARE NOW OVER, SOON THE
REALITY IPOs WILL GAIN THEIR POSITION AGAIN.
 WELCOMING TO THE FOREIGN INVESTORS
 INVESTOR SHOULD PREFER IN REALITY FIRMS
THAT OFFER INSTEAD OF MERELY RELYING ON
LAND BANK VALUATION.
 SOLUTION
 THE IPOs SHOULD DISCOUNTED AS
LOW AS POSSIBLE
 SEBI & RBI SHOULD HELP THE REAL
ESTATES COMPANIES.
 TO REVIVE AGAIN INTO THE MARKET
UNETHICAL PRACTICES WHICH LOSE
THE HOPES OF THE INVESTORS
SHOULD BE STOPED.
 MENTALITY OF THE INVESTORS
SHOULD BE CHANGED.
 CONCLUSION
 THE DAWN OF IPO IS STILL FAR AWAY

 “ THIS TERM IS OVER BUT THE

WRECKAGE IS STILL OUT THERE”