Morgan Stanley-Backed Oberoi IPO Attracts Demand 12 Times Size of Offering

Oberoi Realty Ltd., a Morgan Stanley- backed developer, received demand for 12 times the shares on offer on the last day of its initial public offer.

Mumbai-based Oberoi received bids for 393.5 million shares, compared with 32.4 million shares offered in the sale, as of 6:30 p.m. local time today, according to data on the National Stock Exchange’s website. Oberoi, which mostly develops residential real estate in Mumbai, aims to raise as much as 10.3 billion rupees ($232 million) from the sale.

The demand for the developer’s IPO ends a five-month lull in realty share sales and paves the way for an offering by Prestige Estates Projects Ltd., a Bangalore-based developer. The success of Oberoi’s IPO may prompt $3 billion of property share sales after real estate stocks have underperformed the Bombay Stock Exchange’s benchmark Sensitive Index.

The BSE Realty Index has gained 1.2 percent this year, compared with a 16 percent advance in the Sensex.

Oberoi, founded by billionaire Vikas Oberoi, sold 7.12 million shares at 260 rupees each to investors including Fidelity Fund Management Pvt., Eton Park International LLP and T. Rowe Price Group Inc. before the sale opened.

Prestige Estates plans to raise 12 billion rupees in its initial offer starting Oct. 12. The developer will offer the shares at 173 rupees to 183 rupees each, the company said yesterday.

Millionaires, Billionaires

Demand for luxury apartments in India is rising as the biggest rally in stocks in 18 years in 2009 boosted the ranks of the affluent in the third-fastest growing major economy. The South Asian nation has 84,000 millionaires, according to a World Wealth Report by Cap Gemini SA and Merrill Lynch Wealth Management. The number of millionaires in India is expected to triple between 2008 and 2018, according to the report.

About 40 percent of India’s 52 billionaires, the most in Asia after China, live in Mumbai, according to Forbes magazine.

Indian realty companies such as Lodha Developers Ltd. and Emaar MGF Land Ltd. are among at least 11 builders waiting to tap the market, according to data compiled by Bloomberg.

Oberoi plans to use the proceeds from the IPO to complete pending projects and buy land in Mumbai, Oberoi, who is managing director, has said. The builder is currently working on 13 projects with another 11 being planned, according to its offer document. The total saleable area of these projects is expected to be about 20.25 million square feet.

Oberoi’s profit rose 84 percent to 4.6 billion rupees in the year ended March 31, 2010. Sales climbed 77 percent to 8.05 billion rupees.

A Morgan Stanley real estate fund in January 2007 invested 6.75 billion rupees for a 10.76 percent stake in Oberoi, according to the offer document.

Kotak Mahindra Capital Co., Enam Securities Pvt., J.P. Morgan India Pvt. and Morgan Stanley India Co. managed the sale.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net;

To contact the editor responsible for this story: Andreea Papuc at Apapuc1@bloomberg.net

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