Sobha Ltd. Plans ₹2,000 Crore Rights Issue Amidst Strong Stock Performance

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Sobha Ltd. Plans ₹2,000 Crore Rights Issue Amidst Strong Stock Performance

Team FS

13/Jun/2024

Key Points:

Massive Rights Issue: Sobha Ltd. approves a rights issue to raise ₹2,000 crore through 1.21 crore equity shares, priced at a 20% discount to the market.
Record Date and Subscription: Shareholders will receive six rights shares for every 47 held, with the issue opening on June 28 and closing on July 4, 2024.
Market Performance: Sobha's stock has doubled in 2024 and tripled over the past year, nearing ₹20,000 crore in market cap.

Sobha Ltd., a prominent real estate developer based in Bengaluru, has announced its intention to raise ₹2,000 crore through a rights issue of shares. The decision comes amidst robust performance of Sobha's stock, which has seen significant gains in 2024, climbing 102% year-to-date as of Wednesday's closing session. Over the past 12 months, Sobha's shares have surged by 268%, reflecting strong investor confidence and market momentum.

The rights issue will involve the issuance of 1.21 crore equity shares priced at ₹1,651 per share, which represents a 20% discount to the stock's closing price before the announcement. Shareholders as of the record date, set for June 19, 2024, will be entitled to six rights equity shares for every 47 shares held. The issue is scheduled to open on June 28 and close on July 4, 2024. Shareholders will initially pay a premium of ₹820.5 per share, with the remaining amount payable in up to two subsequent calls by December 31, 2025.

Sobha's decision to raise capital through a rights issue follows a strategic move to capitalize on its strong market performance and to fund future growth initiatives. The company's market capitalisation is nearing ₹20,000 crore, underscoring its stature within the real estate sector and the broader market.

In addition to its fundraising plans, Sobha's announcement coincides with similar capital raising activities by its peers in Bengaluru's real estate landscape. Prestige Estate, for instance, is preparing for an Initial Public Offering (IPO) of its hospitality unit, highlighting the sector's ongoing activity in raising funds to fuel expansion and innovation.

Overall, Sobha's rights issue is poised to bolster its financial position, support ongoing projects, and enhance its competitive edge in the dynamic real estate market. As the company navigates regulatory landscapes and market dynamics, its ability to execute on its growth strategy will be closely monitored by investors and stakeholders alike.

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Sobha Ltd. Plans ₹2,000 Crore Rights Issue Amidst Strong Stock Performance

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