DB Realty Aims for Comeback with ₹2,000 Crore Fundraise, Eyes Debt Reduction and Strategic Investments

21 Feb 2024 , 03:48 PM

DB Realty Ltd intends to raise ₹1,500-2,000 Crore through the sale of shares to qualified institutional investors, aiming to complete the fundraising in the coming weeks, contingent on market conditions.

The fundraising effort follows a hiatus of several years and could signify a positive turnaround for DB Realty, a once-prominent real estate developer in the Mumbai market.

DB Realty faced challenges when its promoters, Shahid Balwa, and Vinod Goenka, were implicated in the 2G spectrum allocation scam. Although acquitted in December 2017 due to insufficient evidence, the legal battle caused project delays and alienated lenders.

Investment banks JM Financial and DAM Capital have been enlisted by DB Realty to facilitate the fundraising, with talks already underway and good investor interest reported.

The fundraising comes amid a 46% surge in DB Realty’s stock price since the beginning of the year, reaching ₹267.70, and a fourfold increase over the past 12 months.

The fundraising is expected to result in a 10-15% dilution for existing shareholders, with promoters holding a 50.89% stake as of December 31.

Despite limited institutional shareholders, the late Rakesh Jhunjunwala’s family owns a 4.98% stake in the company.

DB Realty aims to utilize the funds to further reduce debt and invest in new and ongoing projects, as outlined in a recent notice to shareholders.

The company has been actively restructuring, reporting a consolidated net profit of ₹1,330 Crore for the nine months ending December 31, compared to a loss of ₹77 Crore in the previous year.

As part of its turnaround strategy, DB Realty sold its stake in two joint ventures with Prestige Estates Projects and entered partnerships with Adani Property, Godrej, Prestige Estate, and Man Infra for the development of approximately 16 million sq ft of residential, hotel, and commercial properties.

DB Realty also plans to demerge its hotel business to unlock value, a move endorsed by the board on February 9, aiming to attract investors and focus on the potential of the Indian hospitality sector.

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