Signature Global looks to raise ₹1,000 cr via IPO, files DRHP

Real estate major Signature Global has filed draft red herring prospectus (DRHP) with capital markets regulator Securities and Exchange Board of India (SEBI) to raise ₹1,000 crore through the initial public issue route.

As per the preliminary papers filed with the markets watchdog, the Signature Global initial public offering (IPO) will comprise a fresh issue of shares worth ₹750 crore, and an offer for sale (OFS) portion worth ₹250 crore.

The board of Signature Global had authorised the fresh issue in its meeting on June 23; the motion was approved by the company’s shareholder as a special resolution during their meeting on June 24.

The OFS portion will see promoter shareholder Sarvpriya Securities Private Limited and investor shareholder International Finance Corporation offload stake worth ₹125 crore each. Boards of both shareholders have given their approval to the stake sale during meetings on June 15 and July 7, respectively.

Both selling shareholders will be entitled to the proceeds from the OFS basket after deducting its portion of the offer related expenses and applicable taxes thereon. The company will not receive any proceeds from the offer for sale, and the proceeds thus received will not form part of the net proceeds, Signature Global clarifies in the DRHP filed with SEBI.

The company’s equity shares outstanding prior to the initial public offer stand at equity shares outstanding prior to the offer 11,37,58,800 shares.

The net proceeds of the IPO, after deducting the OFS portion, will be utilised for re-payment or pre-payment, in full or in part, of certain borrowings availed by Signature Global. The company will spend ₹330 crore on this objective. As of May 31, 2022, the company’s outstanding loan stood at ₹537.96 crore, the DRHP shows.

Of the net proceeds, ₹140 crore will go towards Infusion of funds in the Delhi-NCR-based realty player’s subsidiaries for re-payment or pre-payment, in full or in part, of certain borrowings availed by these units. Signature Global says it will infuse ₹55 crore in Signatureglobal Homes, ₹30 crore in Signature Infrabuild, ₹20 crore in Signatureglobal Developers, and ₹35 crore in Sternal Buildcon.

The remaining net proceeds will be used for inorganic growth through land acquisitions and general corporate purposes. The company has shared plans to buy over 100 acres of land in various parts of Gurugram and Sohna under this object of the offer, with an outlay of almost ₹573 crore.

Signature Global intends to complete these objectives during the current fiscal, according to the DRHP.

In the preliminary IPO document, the company quotes an Anarock report to state that it is the largest real estate development company in Delhi NCR, focussed on affordable and mid segment housing in terms of units supplied in the below ₹80 lakh price category between 2019 and 2021. Signature Global states it has a market share of 19%.

As of March 31, 2022, the company has sold 23,453 residential and commercial units within the Delhi NCR region, with an aggregate saleable area of 14.59 million square feet. Its net sales have grown at a compounded annual growth rate (CAGR) of 142.62%, from ₹ 440.01 crore in fiscal 2020 to ₹2,590.04 crore in fiscal 2022. As of March 31, 2022, the company has sold 21,478 residential units with an average selling price of ₹28.1 lakh per unit.

Signature Global has roped in ICICI Securities, Axis Capital and Kotak Mahindra Capital Company as book running lead managers (BRLMs). Link Intime India is the registrar to the issue.