Knowledge Realty Trust REIT Mobilizes Rs 1,620 Crore Ahead of IPO

Knowledge Realty Trust, a newly emerging player in the Indian Real Estate Investment Trust (REIT) sector, has successfully mobilized Rs 1,620 crore in anticipation of its Initial Public Offering (IPO). This significant fundraising effort has garnered attention from some of the most prominent names in Indian investing, including the Life Insurance Corporation of India (LIC) and the Jhunjhunwala Trust. The IPO is set to open for public subscription on Tuesday, marking a pivotal moment for the trust and its stakeholders.

Fundraising Breakdown

The Rs 1,620 crore raised comprises contributions from both anchor investors and strategic institutional investors. Specifically, Rs 1,200 crore has been secured from institutional backers, while the remaining amount comes from a diverse group of anchor investors. This fundraising effort is further bolstered by a previous pre-IPO round that raised Rs 1,400 crore, showcasing robust institutional interest in the venture.

The anchor book reflects a broad spectrum of institutional participation, with over 50 investors involved. Notably, LIC’s participation in this REIT IPO marks a significant milestone, as it is the first time the insurance giant has invested in a REIT. Other notable participants include Tata AIG, Nippon Mutual Fund, Axis Mutual Fund, PIMCO, SBI Pension Fund, Tata Mutual Fund, and global investment firms like Amundi and Wells Capital. The Jhunjhunwala Trust and 360 One also played a role in the anchor tranche, further solidifying the trust’s credibility.

IPO Pricing and Structure

The IPO is priced within the range of Rs 95 to Rs 100 per unit, with a fresh issuance of units worth Rs 4,800 crore. Of this amount, Rs 1,400 crore has already been raised through strategic placements and the pre-IPO round. The remaining Rs 1,980 crore is available for public subscription, with Rs 1,080 crore reserved for institutional investors and Rs 900 crore allocated for retail investors and high-net-worth individuals (HNIs). The minimum application size for retail investors is set at Rs 15,000, making it accessible for a wide range of participants.

Utilization of Proceeds

The proceeds from the IPO are strategically earmarked for two primary purposes. A significant portion will be directed towards the repayment or prepayment of existing debts associated with the underlying asset Special Purpose Vehicles (SPVs) and investment entities. The remaining funds will be utilized for general corporate purposes, ensuring the trust is well-positioned for future growth and stability.

Regulatory Framework and Management

This IPO is particularly noteworthy as it is the first REIT offering under the Securities and Exchange Board of India (SEBI)’s new master circular for REITs, issued on July 11. The sponsors of Knowledge Realty Trust include Sattva Developers and BREP Asia SG L&T Holding (NQ), with Axis Trustee serving as the trustee. The management of the issue is handled by Knowledge Realty Office Management Services, formerly known as Trinity Office Management Services, ensuring a professional approach to the IPO process.

Conclusion

The mobilization of Rs 1,620 crore ahead of its IPO positions Knowledge Realty Trust as a significant player in the Indian REIT landscape. With backing from esteemed institutional investors and a clear strategy for the utilization of proceeds, the trust is poised for a successful public offering. As the IPO opens for subscription, it will be interesting to see how the market responds to this new investment opportunity, which promises to bring innovative solutions to the real estate sector in India.