Lodha Said to Seek IPO Valuing Indian Developer at $10 Billion

The Indian developer of the world’s tallest residential tower in Mumbai is planning an initial public offering that may raise as much as $1 billion, said people with knowledge of the matter.

The sale may value Lodha Developers Pvt. at as much as $10 billion, according to one of the people. Shares of the Mumbai-based company will probably start trading next year, two of the people said, asking not to be identified as the deliberations are confidential.

Lodha is seeking a listing after home prices in Mumbai, the country’s financial capital, more than doubled in the five years through March, according to data from Liases Foras Real Estate Rating & Research Pvt. A $1 billion IPO would be India’s biggest since 2010, when state-owned miner Coal India Ltd.’s share sale raised $3.4 billion, data compiled by Bloomberg show.

The company is building the 117-story World One residential tower, which it says will be the world’s tallest at 423 meters (1,390 feet), according to its website. The development, which will feature apartments outfitted by Giorgio Armani SpA’s interior design brand, is located in central Mumbai’s Lower Parel district near the offices of Morgan Stanley and KKR & Co.

Lodha may be competing for stock-market funding with the Indian government, which is planning to reduce its stakes in state-owned companies including Coal India and Power Finance Corp., said P. Phani Sekhar, a Mumbai-based fund manager at Angel Broking Ltd.

Asset Sales

Prime Minister Narendra Modi’s administration plans to earn more than 800 billion rupees ($13.3 billion) from the asset sales in the year to March 31, finance ministry officials with direct knowledge of the matter said last month.

“The stock market hasn’t improved sufficiently and the government has also planned a lot of disinvestment for state-run companies,” Sekhar said, adding economic growth needs to accelerate to at least 7 percent for the Indian real estate industry to revive.

While the benchmark S&P BSE Sensex index has almost doubled in the past five years, shares of billionaire Kushal Pal Singh’s DLF Ltd., the largest listed developer in India, have slumped 36 percent in the same period. India’s $1.8 trillion economy expanded 4.7 percent in the year ended March 31, near the slowest pace in a decade.

The combined debt of India’s six-biggest listed developers climbed to a record 394 billion rupees as of March 31, from 158.8 billion rupees in 2007, according to data compiled by IIFL Ltd.

Reviving Plans

Lodha is reviving its IPO after seeking to raise as much as 27.9 billion rupees in 2010. Lodha has held discussions with investment banks about an IPO, though the process is at an early stage and no advisers have been hired, the people said.

“We are well capitalized to meet our business growth plans through our internal cash flows, and have no plans of raising capital through a public listing at this time,” Lodha said in an e-mailed response to questions.

Foreigners have poured $11 billion into Indian shares, spurring an 18 percent rally in the Sensex this year, the best performance among the world’s 10 biggest markets, data compiled by Bloomberg show. The index may double in the next three years after Modi laid the groundwork for strengthening Asia’s third-largest economy in last week’s budget, according to BlackRock Inc.

Buying Properties

Lodha agreed to buy a Canadian diplomatic property in central London’s Mayfair district in November for C$530 million ($495 million). In February, it bought another London property on Carey Street, close to the Royal Courts of Justice, for 90 million pounds ($154 million) to develop a residential project.

Lodha is building Palava, a 4,000-acre (16.2-square-kilometer) township near the planned second airport in Mumbai. The company, founded in 1980 by Chairman Mangal Prabhat Lodha, has more than 35 million square feet under development, according to its website.

In 2010, Lodha bought a central Mumbai plot for 40.5 billion rupees from the Mumbai Metropolitan Region Development Authority, which it said was India’s biggest land deal to date, according to the company’s website. The company acquired a 17-acre plot in central Mumbai from DLF for 27 billion rupees in 2012.

Lodha posted sales of 90 billion rupees in the 12 months ended March 2013, the most recent year for which figures are available, according to the company’s website. That’s higher than DLF, which reported sales of 77.7 billion rupees that year, data compiled by Bloomberg show.

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