Indian PE-backed realty firm in INR5bn IPO push

Mall and real estate developer Entertainment World Developers plans to raise fresh capital through an IPO to fund new projects in India.

Real estate company Entertainment World Developers (EWDPL), which counts private equity firms such as ICICI Venture and Kshitij Venture Capital as investors, plans to raise up to INR5 billion (€84 million; $107 million) via an initial public offering (IPO), a source confirmed to PERE's sister magazine PEI Asia.

The new issue of shares through the IPO will constitute 30 percent of the post-issue paid up capital of the company, it said in its draft red herring prospectus filed with the Securities and Exchange Board of India (SEBI).

EWDPL is an Indore-based operator of retail properties including a 450 thousand square foot mall and hotel marketed under the “Treasure” banner which counts companies such as Pizza Hut, Geoffrey’s and Pantaloon as tenants. 

According to the draft prospectus, the company is currently operating three completed projects and has 11 others under development. Additionally, the company is also planning to set up two townships in Indore, a township each in Ujjain and Nanded and malls in Jabalpur, Raipur, Vadodara and Indore. 

ICICI first invested in EWDPL in November 2006 through a purchase of optionally convertible debentures for $16 million. Currently the firm holds a 0.31 percent stake in the company. It is not clear if the investors will be divesting their stakes in Entertainment World. 

ICICI Venture declined to comment. Kshitij did not respond to a request for comment by press time.

ICICI Venture is currently in the market for India Advantage Fund Series 3 (IAF Series 3), a private equity fund with a $500 million target and a hard cap of $800 million. By March 2010, the fund had raised $400 million. The firm will also commence fundraising for a real estate fund and an infrastructure fund this year. 

In the six months ending 30 June 2010, there were a recorded total of 63 exits made by private equity firms in India, including 27 in the second quarter. Of these 27 exits, two were made via IPOs and the remainder through mergers and acquisitions including strategic and secondary sales. 

The book running lead managers for the issue are ICICI Securities, Edelweiss Capital and Kotak.