Sobha Developers Ltd, the Bangalore based real estate player, is looking to spin off into different companies its businesses such as interiors and wooden furniture, building materials, mattresses and a design studio, which support its construction activity.
The company plans to dilute minority stake in these businesses after spinning them off and to use the amount raised to pay its debts and fund realty projects.
Raghav Menon, vice president (retail), said he will provide full details of the move next week.
An analyst said Sobha is exploring the option of supplying products such as mattresses, sofa and furniture to large home retail formats and selling building materials like cut stones and blocks to other companies. It has a 120,000 sq ft woodworking facility that makes doors, windows, wall panelling, cabinets, cupboards, wardrobes, office and home furniture. Sobha also has a metal-glazing division in Bangalore that makes frames, wall panelling, modular kitchens, upholstery, conference tables, workstation, etc.
Rupesh Sankhe, an analyst with Centrum Research, said in a note, “Sobha Developers has been planning a structural change in its business by spinning off its back-end businesses that were essentially serving the company’s captive needs into different companies.”
The amount the company plans to raise through stake dilution and the names of the buyers it is in talks with couldn’t be confirmed. Sobha is looking at sales of Rs 25 crore in the mattress segment, and Rs 50 crore in the furniture segment in 2009-10.
Meanwhile, Sobha may raise Rs 750 crore to repay its outstanding debts of Rs 1,850 crore through qualified institutional placement (QIP) of shares. It is also looking to sell 200 acres from its 3,000-acre land bank.
Recently, New Delhi based developer Unitech used the QIP route to raise $325 million from global investors such as the Government of Singapore Investment Corporation, HSBC, etc.
