Macrotech raising 4000 crore equity from institutional investors

Macrotech Developers (Lodha Group) is raising about Rs 4,000 crore equity through preferential placement to the institutional investors.

Key points to note –

  • Issue comprises of 3.4 crore fresh issues of shares at floor price of Rs 1184.7/ share
  • It would entail 7.5% dilution of the existing shareholders
  • Objective of the fund raise is wide and open – “The company intends to use the net proceeds for various purposes, including but not limited to, capital expenditure including acquisition of land, land development rights or development rights, deleveraging and general corporate purposes.”

In May, Abhishek Lodha, MD and CEO of the group, said that the company aims to be debt free over the next three years. As at September 2021 end, the Company had an outstanding debt of more than Rs 15,000 crore.

How much of the fresh fund raise goes towards debt repayment remains to be seen. The planned target of becoming debt free within 3 years seems ambitious to me.

There is no doubt that real estate cycle is reviving. However, whether developers use this opportunity to clean up their balance sheets or buy more and more land remains to be seen.

Historically very few developers have kept calm in up cycles. Most others have created excesses.

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