Sobha Rights Issue: Real Estate Developer to Raise ₹2,000 Crore

SENSEX 78041.59 -1176.45 (-1.51)

NIFTY 50 23587.5 -364.2 (-1.54)

GOLD 78145 565 (0.72)

SILVER 93500 -1000 (-1.07)

NASDAQ 19572.6 199.83 (1.02)

FTSE 8084.61 -20.71 (-0.26)

Nikkei 38701.9 -111.68 (-0.29)

Crude 5944 5 (0.08)

USD/INR 84.95 0.01 (0.01)

EURO 88.6 0.25 (0.28)

POUND 106.83 0.07 (0.07)

YEN 0.54 -0.01 (-1.85)

Sobha Rights Issue: Real Estate Developer to Raise ₹2,000 Crore

Sobha's rights issue will open on June 28 and close on July 4.

June 13th, 2024 News

Bengaluru-based real estate developer Sobha Ltd. has announced a significant fundraising plan through a rights issue, aiming to raise up to ₹2,000 crore. This move comes as the company looks to leverage its strong performance in the real estate market and further its development projects.

Key Highlights:

Rights Issue Details: Sobha will issue 1.21 crore rights equity shares on a partly-paid basis to raise ₹2,000 crore, assuming full subscription and payment of the call monies.
Issue Price: The rights issue price has been set at ₹1,651 per share, a 20% discount compared to the stock's closing price on Wednesday.
Entitlement Ratio: Shareholders will be entitled to receive six rights equity shares for every 47 shares held as of the record date.
Record Date: The record date for determining shareholders' entitlement is June 19, 2024.
Subscription Period: The rights issue will open on June 28 and close on July 4.

Payment Structure:

Upon applying for the rights issue, shareholders will need to pay a premium of ₹820.5 per share of face value worth ₹5 each. The balance amount will be payable in no more than two subsequent calls on or prior to December 31, 2025.

Market Performance:

Sobha's shares have shown a remarkable performance in 2024, doubling in value with a 102% increase as of Wednesday's closing session. Over the last 12 months, the stock has more than tripled, gaining as much as 268%, making it one of the top performers on the Nifty Realty Index. The company's market capitalisation is nearing ₹20,000 crore, with shares closing at ₹2,070 on Wednesday.

Context and Future Plans:

Sobha's decision to raise funds through a rights issue follows a similar move by another Bengaluru-based real estate peer, Prestige Estate, which is planning an Initial Public Offering (IPO) of its hospitality unit. The company has termed capital raising as "a normal activity" in the real estate business, indicating its ongoing growth and expansion strategies.

Conclusion:

This rights issue is a strategic move by Sobha Ltd. to bolster its capital base, supporting its ambitious development plans. With the real estate market showing strong growth potential, Sobha is positioning itself to take full advantage of the favorable conditions and continue its trajectory of robust performance. Shareholders and investors will be keenly watching the subscription period from June 28 to July 4, as this rights issue unfolds.