Lodha Developers cannot do an IPO because of past violations

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SEBI, the chief Regulator for all share markets in India, has kept Realty biggie Lodha Developers’ maiden push towards an IPO in abeyance “for examination of past violations,” latest update with the markets watchdog showed. The IPO proposal is for Rs. 55,000 Crores.

Why has that happened?

Okay, before that let me introduce some of you who do not yet know Lodha Developers very well.

Privately-held Lodha Group is developing around 40 million sq ft area and has 31 ongoing projects in London, Mumbai Metropolitan Region, Pune, Bengaluru and Hyderabad. It has a land bank of 350 million sq ft for future development.

However, the Securities and Exchange Board of India (Sebi) did not clarify further.
The company had filed preliminary papers with Sebi on April 26, seeking approval to float an initial public offering.

Now what would be “past violations”?

A. Private placements from other parties as investment that needs a whole lot more scrutiny.
B. Borrowings from Banks and Financial Institutions that may have ballooned and the IPO is being launched to pay that off.
C. Balance sheets that are not tallying with norms of the nation
D. All the above.

As per the draft papers filed with Sebi, the company plans to issue fresh shares worth Rs 3,750 crore, besides, an offer for sale of 1.8 crore shares by the promoters.

Also, it aims to raise about Rs 750 crore out of the proposed issue through a pre-IPO placement of 95 lakh fresh shares.

According to sources, the company is looking to raise about Rs 5,500 crore through IPO, including pre-placement of shares.

Earlier, the company had filed draft papers in September 2009 to raise about Rs 2,800 crore. It had received Sebi’s nod in January 2010, but later shelved its plan to launch the IPO due to bad market conditions post the global financial crisis.

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