Real estate firm Signature Global has received an approval from the Securities and Exchange Board of India (Sebi) to launch its initial public offering (IPO) to raise Rs 1,000 crore. The developer had submitted its draft red herring prospectus (DRHP) with the markets’ regulator in July this year. The approval document (observation letter) from the Sebi is dated November 24, 2022.
The Delhi-based developer will use the proceeds raised through the IPO to repay debt and invest in land purchases. The lead managers for the issue include ICICI Securities, Kotak Mahindra Capital and Axis Capital.
“We intend to use the net proceeds for repayment or prepayment of certain borrowings availed by our company; infusion of funds in our subsidiaries (Signature Global Homes, Signature Infrabuild, Signature Global Developers and Sternal Buildcon) for repayment or prepayment of certain borrowings; and inorganic growth through land acquisitions and general corporate purposes,” the company said in its DRHP.
As on May 31, 2022, the company’s aggregate outstanding debt, including that of its subsidiaries, stood at Rs 1,622 crore.
The offer includes fresh issue of equity shares worth Rs 750 crore and an offer for sale of up to Rs 250 crore. Sarvpriya Securities Private Limited, the promoter company, and International Finance Corporation, the investor shareholder, would each sell equity shares worth Rs 125 crore.
Pradeep Aggarwal-promoted Signature Global started operations in 2000 under the brand name Ridisha Marketing, which was changed to its current name in 2014. Active in affordable in mid-range housing segment, the company claims to have a 19% market share in the Delhi-NCR housing market. The company posted net loss of over Rs 115 crore in FY22 and Rs 86.27 crore in FY21.
“We have incurred net loss in the past, and we may not be able to achieve or maintain profitability in the future. In FY20, FY21 and FY22, the company had net cash inflow from operating activities of Rs 72.5 crore, Rs 36.4 crore and Rs 205.2 crore, respectively. However, due to factors such as our accounting policy on revenue recognition, the company made net losses (during these years),” the company said in the DRHP.
