Runwal Enterprises, a prominent real estate developer based in Mumbai, has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise Rs. 1,000 crore through an initial public offering (IPO). The offering will consist of a fresh issue of equity shares, with no offer-for-sale component. The company may also consider a pre-IPO placement of securities, totaling up to Rs. 200 crore, which would not exceed 20% of the size of the fresh issue, thereby potentially reducing the size of the fresh issue.
IPO Structure and Use of Proceeds
The IPO will be conducted through the book-building process, and the company has outlined specific allocation plans for different types of investors. At least 75% of the net issue will be reserved for qualified institutional buyers (QIBs), while non-institutional bidders will be allocated no more than 15% of the offer. The remaining 10% will be set aside for retail individual bidders.
The fresh issue proceeds will be primarily used for the following purposes:
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Rs. 200 crore for the repayment or prepayment of outstanding borrowings.
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Rs. 450 crore for investment in key subsidiaries, including Susneh Infrapark, Runwal Residency, and Evie Real Estate, as well as for repayment of their borrowings.
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Funds will also be allocated for acquiring new real estate projects and for general corporate purposes.
Financial Performance and Growth
Runwal Enterprises has demonstrated strong growth in its financials. The company’s restated consolidated revenue from operations surged by 188.55%, rising from Rs. 229.49 crore in FY23 to Rs. 662.19 crore in FY24. In a significant turnaround, the company moved from a loss in FY23 to a profit of Rs. 107.28 crore in FY24. For the six months ending September 30, 2024, the company reported a revenue of Rs. 270.52 crore and a profit after tax of Rs. 25.53 crore.
The company’s residential portfolio is expansive, with a total developable area of approximately 48.71 million square feet. This growth is expected to continue as Runwal focuses on both expanding its project pipeline and solidifying its position in the real estate sector.
Strategic Investments and Market Outlook
Runwal Enterprises is focused on expanding its operations through investments in high-potential real estate developments. The fresh capital raised from the IPO will enable the company to further grow its business and meet its expansion goals. The strategic investments in its subsidiaries and acquisition of future projects will enhance its position in the competitive Mumbai real estate market.
Role of Book-Running Lead Managers
ICICI Securities and Jefferies India are acting as the book-running lead managers for the IPO, while MUFG Intime India will serve as the registrar for the offer. These firms will help manage the offering process and ensure that the IPO meets market requirements and investor expectations.
What This Means for Investors
For potential investors, the IPO presents an opportunity to tap into one of Mumbai’s leading real estate developers, with a focus on residential developments across key areas. Runwal Enterprises has a proven track record of strong revenue growth and profitability, making it an attractive option for those looking to invest in the burgeoning real estate sector.
In conclusion, the Rs. 1,000 crore IPO by Runwal Enterprises represents a significant milestone for the company as it seeks to expand its operations and strengthen its position in the competitive Mumbai real estate market. The strategic use of IPO proceeds will help the company streamline its operations and fund future growth, positioning it for long-term success.