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Kolkata: Knowledge Realty IPO has made history with its IPO. It will be the fourth REIT to be listed on the Indian bourses. However, it has become a landmark IPO on two important counts -- it is not only the biggest IPO till date of a REIT but also the biggest in terms of applications received. The management of Knowledge Realty IPO began with a design to mobilise Rs 4,800 crore through the public issue. It ended up being flooded with applications nearly 13 times the amount.
The number of units of Knowledge Realty IPO on offer were 20,84,20,800 but the applications received totalled to 2,60,09,22,900 units. According to data, Qualified Institutional Buyers portion was subscribed 9.07 times and non-institutional investors applied for 16.57 times of the part earmarked for them. The IPO was subscribed more than 4 times on the first day of bidding itself. The listing of the units is scheduled for August 18. The listing will take place on both BSE and NSE.
Currently there are three publicly listed REITs in the country -- Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India REIT and all of these thrive on commercial properties in Indian metropolises. These metros include Mumbai, Hyderabad and Bengaluru.
According to the company management, the proceeds of the IPO will be used for retiring debts and for general corporate purposes.
Simply put a REIT is an investment trust which has real estate assets. There is a "sponsor", which conducts the transfers of assets from a special purpose vehicle to a REIT in exchange of the latter's units. The sponsor entity is supposed to hold certain REIT units and the rest are issued, through an IPO, to investors. The IPO proceeds go to the sponsor firm which sells REIT units. Tenants of the assets owned by the REIT will pay rentals to the SPV. The SPV will manage the asset. The unit holders get dividends from the lease rentals paid to the REIT.
The first Indian REIT came in march 2019. It was oversubscribed. It was issued by BRE Mauritius Investments, which is part of the Blackstone group and Embassy Property development.
According to a Crisil report, "REITs account for nearly 50% of the capitalisation of the real estate industry in markets such as Singapore and Japan, where they were introduced nearly two decades ago, while they account for 96% of the market capitalisation in the US, which pioneered REITs in the 1960s. These trends also underpin the opportunity for India considering the real estate sector's market capitalisation of nearly Rs 1.5 lakh crore (ex-REITs)."
(Disclaimer: This article is only meant to provide information. TV9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, INVITs, any form of alternative investment instruments and crypto assets.)
