Nexus Select Trust sets price band at ₹95-100 for India's first retail REIT IPO

Blackstone-backed Nexus Select Trust has fixed a band price of ₹95-100 per share for its ₹3,200 crore initial public offering (IPO) set to take place between May 9-11, which will be India's first pure-play retail REIT (Real Estate Investment Trust) public offer. The bidding for anchor investors will open on May 8 and finalisation on the basis of allotment will be done by May 16. The stock will make its debut on domestic exchanges on May 15.

The real estate investment trust, which owns and operates high-quality shopping malls and other retail properties in India, has cut issue size to ₹3,200 crore from ₹4,000 crore proposed earlier in its offer document filed with SEBI in November last year. The IPO comprises fresh issue of units up to ₹1,400 crore and an offer for sale (OFS) of up to ₹1,800 crore.

The IPO will see major sponsor Blackstone and some other smaller holders partially diluting their stakes in Nexus via the OFS route. The net proceeds from the fresh issue of equity shares will be utilised towards repayments of debts, acquisition of stake, redemption of debt securities in certain special purpose vehicles (SPV), as well as to meet general corporate purposes. As of June 2022, Nexus had debt of ₹4,500 crore, which is likely to come down to ₹3,600 crore post fundraising.

As per document filed with SEBI, the company has reserved up to 75% of the offer for qualified institutional buyers (QIB) and the remaining 25% for high networth individuals (HNI). Morgan Stanley, JP Morgan, Kotak Mahindra Capital, Axis Capital, and BoA ML are the bankers for the proposed public issue.

This would be the fourth REIT to make its debut on the Indian stock exchanges and the first in retail space as all three listed REITs - Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust - are leased office assets. The REIT is an investment instrument that was introduced in India a few years ago to attract investment in the real estate sector by monetising rent-yielding assets. It offers proportionate ownership of an income-generating real estate asset to retail investors.

Besides, this would be Blackstone’s third REIT listing on the domestic bourses after Embassy Office Parks and Mindspace Business Parks. The American private equity firm launched India's first REIT Embassy Office Parks in April 2019 after raising about ₹4,750 crore through a public issue. Mindspace Business Parks was the second REIT that was listed in August 2022 following fundraising of ₹4,500 crore via the IPO route.

With an enterprise value of ₹23,000 crore, Nexus Select Trust has a portfolio of 17 operational shopping malls across 14 major cities, including Select Citywalk Mall in South Delhi, with a total leasable area of 9.2 square feet (msf), two complementary hotel assets (354 keys), and three office assets (1.3 msf) as of December 31, 2022. The company’s business portfolio includes assets that are mixed-use in nature with complementary hotels and office spaces like Hyatt Regency Chandigarh and Oakwood Residence Whitefield Bangalore (together constituting 2.8% of its gross portfolio market value as of June 30, 2022), which are managed by global hotel operators, Hyatt and Oakwood.