Wrong timing? Mindspace REIT IPO gets a thumbs down in grey market

Dealers active in the unofficial market for trading in unlisted shares say the issue is demanding almost negligible premium.

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The price band of the issue has been fixed at Rs 274-275 per share.
New Delhi: After the overwhelming success of Rossari Biotech’s Initial public offering (IPO) and lukewarm response to the YES Bank FPO, the unlisted market seems to be shunning the Mindspace REIT IPO.

Dealers active in the unofficial market for trading in unlisted shares say the issue is demanding almost negligible premium as the bull run has come to a halt in the secondary market. The price band of the issue has been fixed at Rs 274-275 per share.

“There is no buzz about the issue. At the most, it is demanding a premium of Rs 5 in off-market trade,” said Narottam Dharawat of Dharawat Securities, a Mumbai-based firm that operates in the unlisted market.


“Real estate is one of the sectors impacted severely by the Covid-19 crisis and the future looks very uncertain, " he said. “The sector has been facing various challenges such as liquidity crunch, demand drought and huge inventory.”

Investors can bid for a minimum of 200 units and in multiples of 200 units in the issue. One needs to invest a minimum of Rs 55,000 in the issue. Market watchers said with bigger application size, there is not much on the table for retail investors.

A few analysts said the IPO is a play on a stabilising rent-yielding office portfolio. Mindspace Business Parks REIT is looking to raise up to Rs 1,000 crore through issuance of fresh units and up to Rs 3,500 crore through an offer for sale.
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Some brokers find the IPO interesting. “The issue seems to be attractive," Choice Broking said, which has a ‘subscribe’ with caution' rating on the issue. The issue from an entity backed jointly by K Raheja group and Blackstone was subscribed 38 per cent on Day One.

Abhay Doshi, an independent dealer in the unlisted market, said the Mindspace REIT issue appears to be the wrong offer at the wrong time. “Due to the Covid-19 pandemic, working from home is the new normal. An IPO dealing in office space is not coming in an opportune option," he said. “Commercial real estate will not attract investors at this point of time."

Mindspace is the second REIT eyeing a listing on the domestic stock exchanges. In April 2019, Embassy Office Parks was the REIT to be listed on the bourses. It has generated 18 per cent return since listing, but is down about 15 per cent on a YTD basis.

“Embassy Office Parks REIT has failed to generate decent returns for investors. Thus, Mindspace REIT is not gaining much attention in the unlisted market,” said Narottam Dharawat.
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