Debt clearance likely to use up a quarter of realty IPOs

Nearly a quarter of the Rs 11,665 crore funding that five real-estate companies plan to raise through IPOs will be used to re- and pre-pay debt.
Emaar MGF Land, Ambience Ltd, Lodha Developers and Kumar Urban Development have earmarked a part of the IPO proceeds for loan repayment. Sahara Prime City plans to invest the proceeds only in construction and development of projects, as well as general corporate purposes.
According to the preliminary draft prospectus filed with SEBI, Emaar MGF Land intends using about Rs 1,972 crore for debt repayment and prepayment under two heads. It wants to repay Rs 1,772.6 crore of its outstanding debt from the IPO proceeds and de-leverage the balance-sheet. Its lenders include LIC, Axis Bank, LnT Infra Finance Co, HDFC Ltd and UTI MF. Other lenders are SBI, HSBC Ltd, Bank of India, Standard Chartered Bank, Citibank, IndusInd Bank and Kotak Mahindra Bank.
Additionally, it plans to use Rs 199.5 crore to fund Emaar MGF Construction for repayment and prepayment of loan facilities. The modalities of funding Emaar MGF Construction are yet to be finalized, but could be via both debt and equity. The remaining proceeds of the IPO would go towards development charges and license renewal fee, redemption of preference shares and general corporate purposes.
Ambience Ltd, which is developing commercial and luxury residential complexes in the National Capital Region, wants to prepay up to Rs 475 crore of outstanding loans. The rest would go for the development and construction of projects such as the Caitriona condominium complex (Gurgaon), an office complex at Ambience Island Township (Gurgaon) and Ambience City township project (Panipat).
Mumbai-based Lodha Developers proposes to use Rs 299.3 crore from the IPO proceeds to fund subsidiaries that have taken loans from various banks/financial institutions. It would deploy Rs 1,833 crore for the construction of eight ongoing and planned projects.
Kumar Urban Development, which is present in Pune, Mumbai, Bangalore, Hyderabad and Nagpur, plans to use about Rs 200 crore from the IPO proceeds to repay loans. The remaining amount from the Rs 450-crore public issue will be used to acquire land development rights and for construction costs.