BENGALURU: Realty firm Sobha Ltd will launch its rights issue on Friday to raise up to Rs 2,000 crore mainly to reduce debt, purchase land as well as machines and meet the construction cost of its various projects. The issue will close on July 4.
On June 12, the Board approved the terms of the rights issue.
The Bengaluru-based company would issue 1,21,07,981 equity shares each on partly-paid basis for an amount up to Rs 2,000 crore.
The price fixed for rights issue is Rs 1,651 per share (including premium of Rs 1,641 per share).
The rights entitlement ratio has been fixed at 6 rights equity shares for every 47 fully paid-up equity share of the company held by the eligible equity shareholders of the company, as on the record date.
On the objects of the issue, the company has proposed to utilise Rs 905 crore for repayment or prepayment, in full or in part, of certain borrowings.
The company plans to utilise Rs 212.35 crore to fund certain project related expenses for ongoing and forthcoming projects.
It will use Rs 210 crore to purchase equipment and machinery, and Rs 658.58 crore to buy land parcels, according to the letter of offer.
In May, Sobha Ltd Chairman Emeritus PNC Menon had said that the company would increase its equity capital by four times to Rs 10,000 crore over the next five years to support future expansion plans and would launch a rights issue to raise around Rs 2,000 crore.
Sobha Ltd is part of Sobha Group that was founded by PNC Menon in 1995. The Group has real estate business in Dubai under an entity named Sobha Realty.
“We want to increase the equity of the company. So the purpose of bringing the rights issue is to provide money into the company so that we can fund the growth,” Sobha Ltd Chairman Ravi Menon had said in an interaction last month in Dubai .
Post rights issue to eligible equity shareholders of the company, the equity capital base would increase to Rs 4,500 crore from Rs 2,500 crore currently.
Promoters having a 52 per cent stake in the company would participate in the rights issue.
Sobha Ltd’s long-term target is to increase equity capital to Rs 10,000 crore over the next five years.
“So over a period of time, within the next 4-5 years, we should be Rs 10,000 crore equity. And we are reasonably disciplined on the debt,” said 76-year-old PNC Menon, who is Chairman Emeritus of Sobha Ltd and Chairman of Sobha Realty.
“…as the development happens, you start generating profits and that gets going back into the equity,” Ravi had said.
Sobha Ltd has chalked out an aggressive expansion plan and will soon enter the Mumbai luxury housing market, as it seeks to achieve more than a four-fold jump in annual sale bookings to Rs 30,000 crore in the next 4-5 years.
The company had posted a 28 per cent growth in sales bookings during the last financial year to Rs 6,644.1 crore from Rs 5,197.8 crore in the 2022-23 fiscal.
Sobha Ltd is looking at all options to acquire land parcels in the Mumbai region, including outright purchases, joint development with land owners and redevelopment of existing housing societies.
“Our India business, Sobha Ltd, will enter the Mumbai market. I have a dream, we have to show something which India has not seen. We are going to follow the same methodology that we do here. When you do that, it becomes expensive. The cost will go up. The only place in India which can pay is Mumbai,” PNC Menon had said.
Sobha Ltd got listed on the Indian stock exchanges in 2006 and is one of the leading players in South India. It has presence in Delhi-NCR market.
