Realty firm Sobha Ltd is set to launch its rights issue aiming to raise up to Rs 20 billion. The proceeds will primarily be used to reduce debt, acquire land and machinery, and cover construction costs for various projects. The issue will close on July 4.

On June 12, the Board approved the terms of the rights issue. The Bengaluru-based company plans to issue 1,21,07,981 equity shares on a partly-paid basis at a price of Rs 1,651 per share, which includes a premium of Rs 1,641 per share. The rights entitlement ratio is set at 6 rights equity shares for every 47 fully paid-up equity shares held by eligible shareholders as of the record date.

Allocation of Funds Sobha Ltd intends to use Rs 9.05 billion to repay or prepay certain borrowings. An additional Rs 2.12 billion will fund project-related expenses for ongoing and upcoming projects. The company will allocate Rs 2.1 billion to purchase equipment and machinery, and Rs 6.58 billion to acquire land parcels, as detailed in the letter of offer.

Strategic Growth Plans In May, Chairman Emeritus PNC Menon revealed plans to increase the company's equity capital fourfold to Rs 100 billion over the next five years, supported by the rights issue. This initiative is part of Sobha Ltd's aggressive expansion strategy, which includes entering the Mumbai luxury housing market to achieve a significant rise in annual sales bookings to Rs 300 billion in the next 4-5 years.

Currently, the company?s equity capital stands at Rs 25 billion, which is expected to increase to Rs 45 billion post the rights issue. Promoters, who hold a 52 percent stake in the company, will participate in the rights issue.

Future Outlook Sobha Ltd, part of the Sobha Group founded by PNC Menon in 1995, is a leading player in South India's real estate sector and has a presence in the Delhi-NCR market. The company posted a 28 percent growth in sales bookings last fiscal year, reaching Rs 6,644.1 crore. As it prepares to enter the Mumbai market, Sobha Ltd is exploring various land acquisition options, including outright purchases, joint development, and redevelopment of existing housing societies.

"We aim to show something unique in the Indian market, particularly in Mumbai, where the potential for higher returns justifies the costs," said PNC Menon.

Sobha Ltd continues to demonstrate disciplined financial management and strategic growth initiatives, positioning itself for substantial expansion in the coming years.