DLF drops plan for pre-IPO placement

Given the lack of appetite from Indian institutional investors, DLF has dropped its pre-IPO placement plans. Two other Delhi-based real estate companies — Parsvnath, which hit the capital market late last year, and Omaxe, that filed its DRHP last month — also did not go for any pre-IPO placements.

Investment bankers told ET that the kind of valuations that real estate developers are looking for is not very forthcoming from domestic institutional investors. CFO of a real estate company said, “The discounts that Indian investors are seeking at the pre-IPO stage do not go down well with our valuations. Let the capital market set the benchmark for our valuations.”

Experts say lack of clarity on FDI guidelines in real estate is forcing FIIs to stay away from these companies. “A pre-IPO placement will be considered FDI in real estate. Foreign investors have no option but to pick up stakes in specific projects which are FDI-compliant,” said S Subramanium, head (investment banking), Enam Consultants.