Emaar MGF Land reduces price range

Joe Leahy in Mumbai

Emaar MGF Land, the Arab-Indian joint venture developer, has cut the price range of its initial public offering by about 10 per cent in a sign that global stock market turmoil is hitting new share issues in the subcontinent's once-hot IPO market.

The listing is India's second-largest property share listing and had been expected to raise up to $1.8bn.

The offering opens for subscriptions today and closes on Wednesday.

Emaar MGF said yesterday it was cutting the price band of the offering to Rs540-Rs630 from an initial Rs610-Rs690, or 10 per cent at the middle of the range, reducing the maximum amount it can raise to $1.64bn.

"The price band has been refixed considering the prevailing market sentiments and the developments in the financial markets in India and globally," Emaar MGF said in a statement.

The move comes as Reliance Power, a company controlled by billionaire businessman Anil Ambani, is conducting the country's largest IPO, raising $3bn.

That offering was 73 times subscribed when it closed just ahead of the onset of the global market turmoil, and is expected to begin trading this month.

But Reliance Power is now pledging to refund as quickly as possible excess funds it received from investors as deposits for the offering, which some observers have blamed for sucking liquidity out of the market and worsening its falls.

India's benchmark Sensex index has fallen from a record above 21,000 points reached early in January to 17,648.71 at yesterday's close.

The stock market falls have hit the shares of Emaar MGF's listed peers, including DLF, the country's biggest developer, making the Arab-Indian venture look expensive and leaving it susceptible to a sell-down when it begins trading.

The company is a joint venture between Emaar Properties of Dubai and MGF Development of India.

The listing is being closely watched by investors as one of the first of a new set of Arab-Indian property joint ventures to list on the domestic market.

Copyright The Financial Times Limited 2008
Published: February 1 2008 02:00 | Last updated: February 1 2008 02:00