March 20, 2019 / 11:27 AM / a year ago

Investors snap up India's Embassy Office Parks REIT in $690 million IPO

(Reuters) - Embassy Office Parks REIT’s 47.50 billion rupee ($690.31 million) initial public offering, the first by a real estate investment trust in India, was oversubscribed on the last day of sale on Wednesday.

Investors bid for about 183.5 million shares, or 2.57 times the 71.3 million on offer, stock exchange data as of 1200 GMT showed, highlighting confidence in the new investment opportunity.

“This positive response to the REIT will help build further confidence amongst global investors and attract them to consider India along with its global peers such as Singapore and Hong Kong,” said Shishir Baijal, chairman and managing director of property consultant Knight Frank India.

The company is widely referred to as the REIT and is a joint venture between India’s Embassy Group and U.S.-based equity investor Blackstone Group LP.

“It’s a win-win for the market, where you have investors getting more options to invest, and companies getting to monetize their assets,” an analyst with a local brokerage who did not want to be named said of the IPO.

The REIT’s offering also comes at a time when companies in India are returning to equity markets to raise funds, but analysts expect sentiment to remain cautious ahead of national elections starting in April.

The company, which owns offices that house multinational tenants such as JP Morgan and Google will use proceeds of the IPO to reduce its debt and fund acquisition of assets, according to the IPO prospectus.

At a minimum lot size of 800 units and a price band of 299-300 rupees per unit, the REIT’s offering implies an investment of at least 240,000 rupees.

The offering drew strong interest from institutional investors, receiving bids for 83.4 million shares, versus the 38.9 million on offer.

Anchor investors had already committed to buy 58.1 million units at 300 rupees per unit, while 8.76 billion rupees worth of units were reserved for strategic investors.

The REIT aims to list its units on the National Stock Exchange of India and the Bombay Stock Exchange (BSE).

Morgan Stanley India, Kotak Mahindra Capital, J.P. Morgan India and DSP Merrill Lynch are global coordinators and among the book running lead managers for the offering.

Reporting by Chris Thomas in Bengaluru and Promit Mukherjee in Mumbai; Editing by Shreejay Sinha and Emelia Sithole-Matarise

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