Billionaire Vikas Oberoi's Real Estate Unit Surges in Mumbai Trading Debut

Oberoi Realty Ltd., controlled by Indian billionaire Vikas Oberoi, surged on its Mumbai trading debut after investors demanded 12 times the shares on offer in its initial public offering.

The shares advanced 8.8 percent to 282.90 rupees at the 3:30 p.m. close in Mumbai after rising as much as 15 percent. The company backed by Morgan Stanley raised 10.3 billion rupees ($231 million) selling 39.5 million shares at 260 rupees apiece earlier this month.

Oberoi Realty is benefitting from record overseas inflows into equities that may prompt $3 billion of property share sales at a time when real estate stocks have underperformed the Bombay Stock Exchange’s benchmark Sensitive Index. The BSE Realty Index has declined 1.8 percent this year, compared with a 14 percent advance in the Sensex.

“Even at the current prices we continue to see great demand for residences in Mumbai,” Oberoi said in Mumbai today. “I don’t see any softening in prices. Every time people meet me, they say they want to buy a house.”

Demand for luxury apartments in India is rising as the biggest rally in stocks in 18 years boosts the ranks of the affluent in the third-fastest growing major economy. The South Asian nation has 84,000 millionaires, according to the 2009 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.

Cirrus Airplane

That has helped Oberoi make it to the Forbes billionaire list of India’s richest, ranking 46th with a net worth of $1.4 billion. Oberoi, 41, has built the 11.2 million square feet Oberoi Garden City complex, which houses the Westin Hotel, in the city’s north. He recently bought himself a single-engine, four-seater Cirrus airplane, according to Forbes.

Indian realty companies such as Raheja Universal Ltd., 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’s profit rose 84 percent to 4.6 billion rupees in the year ended March 31. 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 its 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: Paresh Jatakia in Mumbai at pareshj@bloomberg.net; Pooja Thakur in Mumbai at pthakur@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

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