MINDSPACE BUSINESS PARKS REIT, the second big company is coming with public issue, in the month of July, 2020.
Soon this company is going to launch its public issue of Rs.4500 crores. It comprises of Rs.1000crores of fresh issue and Rs.3500crores of offer for sale. It is the second REIT to come out with IPO after Embassy Office Park REIT which launched its Rs. 4750 crore IPO in March 2019.
About the Company
This Mumbai based company, owned by K Raheja group and Blackstone, is an irrevocable trust registered with SEBI as Real Estate Investment Trust. It has multiple business parks in different cities with superior infrastructure and amenities (such as restaurants, crèches and outdoor sports arenas). It also have another quality offices in Mumbai, Hyderabad, Pune and Chennai.
The company will be managed by Vinod Rohira, Chief Executive Officer, who has approximately 20 years of experience in the real estate industry and supported by a seven-member core team with experience in operating, developing, leasing and managing commercial real estate in India.
The sponsors of Mindspace REIT are Anbee Constructions LLP (ACL) and Cape Trading LLP (CTL). Both ACL and CTL form part of the K Raheja Corp Group, which is one of India’s leading real estate development and retail business groups.
Axis Trustee Services Limited, owned by Axis Bank, is the Trustee of Mindspace REIT.
REIT Regulations
Under the REIT Regulations, Mindspace REIT has to invest a minimum of 80% of the value of its assets in completed and rent and/ or income-generating properties.
REIT Regulations also impose restrictions on certain investments including investments in vacant land, agricultural land, or mortgages other than mortgage-backed securities and assets located outside India.
As per REIT Regulations, the portfolio of the Mindspace REIT is required to be maintained for a period of minimum 3-years from the date of purchase or completion.
About the IPO
The REIT opens on Jul 27, 2020, and closes on Jul 29, 2020. The total issue of the IPO is Rs.4500 crores out of which Rs.1000 crores is from fresh issue and Rs.3500 crores is from Offer for Sale. The Minimum Order quantity is 200 shares.
KFin Technologies Private Limited is the registrar for the REIT. The shares are proposed to be listed on BSE, NSE.
Morgan Stanley India Company, Axis Capital, DSP Merrill Lynch, Citigroup Capital Markets India, JM Financial, Kotak Mahindra Capital Company, CLSA India, Nomura Financial Advisory and Securities India, UBS Securities India, HDFC Bank, Ambit Capital, IDFC Securities and ICICI Securities are the book-running lead managers to the issue.
As per the document, 75 percent of the net offer (around 9.20 crore units or worth Rs 2,531 crore) is reserved for institutional investors and the rest 25 percent (around 3.07 crore units or worth Rs 844 crore) for non-institutional investors.
Bids can be made for minimum 200 units and in multiples of 200 units thereafter.
The shares will be allotted on August 6, 2020 and Refunds will be initiated on August 7,2020 and shares will be credited in Demat Account on August 7, 2020 and it will get listed on August 12, 2020.
Price Band
The price band for the public issue has been fixed at Rs 274-275 per share.
Objects of the Issue
The net proceeds from its fresh issue will be utilised towards :
1. Full or partial pre-payment or scheduled repayment of certain debt facilities of the Asset SPVs availed from banks/financial institutions (including any accrued interest and any applicable penalties/ premium),
2. Purchase of NCRPS of MBPPL, and
3. General purposes.
Comparison With Peers:
As per RHP, there is only one REIT that is listed in the market i.e. Embassy Office Parks REIT. Embassy Office has an NAV of 374 per share.
Mindspace REIT’s current NAV as on 31.03.2020 stands at 319.5 per share.
Important Factors to look in REIT as an investor.
1. CAGR growth in the rental income over the years.
As per RHP, rentals in the Top Six Indian Markets have grown at a CAGR of 5.0% between 2014 and Q1 2020, which is pretty decent looking at the problems faced by real estate.
2. Vacancy level of the property. It is the difference between the supply of units and the demand for units.
The vacancy level which was around 15% in 2015 has been reduced to 10.2% in Q1FY20. This shows that the mismatch between supply and demand is reducing.
3. Appreciation in the price of the property.
40% of Mindspace property concentrated in Hyderabad and the real estate market of Hyderabad is growing well. So this will augur well in the future.
Summary of Mindspace RIET IPO
| IPO Date | July 27,2020 to July 29,2020 |
| Issue type | Book Built issue REIT |
| Issue Size | Rs.4500 Crores |
| Fresh issue | Rs. 1000 Crores |
| Offer for Sale | Rs. 3500 Crores |
| Price band | Rs. 274-275 /equity share |
| Market Lot | 200 shares |
| Listing at | NSE and BSE |
| Finalisation of Allotment | August 6, 2020 |
| Credit of shares to Demat Account | August 7, 2020 |
| Shares Listing Date | August 12, 2020 |
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Disclaimer: investments are subject to market risks. Please read offer document carefully before investing. The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.
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