NEW DELHI: Dubai-based Emaar PJSC is planning to infuse fresh equity capital in Emaar MGF Land to raise its controlling stake in the company to more than 74%, said two people familiar with the matter.
Emaar PJSC holds 50% stake in Emaar MGF Land, which the Dubai government-owned company had set up as a joint venture with Sharvan Gupta-promoted MGF Development. ET had reported earlier that Emaar PJSC and Delhi-based Gupta have decided to part ways as most of their projects are stuck due to a paucity of funds.
The two entities have agreed on the separation terms through a scheme of demerger of the JV and are awaiting regulatory approval.
Emaar PJSC did not immediately respond to ET’s query about the equity infusion plan, but the persons cited earlier said the stake increase will happen over a period of times once the separation process is complete.
Under the demerger scheme, Emaar MGF will transfer 1,685 acres of land in Delhi, Gurgaon, Mohali and Goa into MGF Development, a company in which Indian partner Gupta will eventually have about 80% stake, said one of the persons cited above, requesting not to be named as the scheme is awaiting regulatory approval.
After the demerger, Emaar MGF will be left with about 6,000 acres of land — including 2,000 acres of licence land — which will be ready for use in either residential or commercial projects. Both sides have filed the demerger scheme in the Delhi high court.
The JV has also decided to write off a loss of Rs 1,846 crore. The amount will be set off against the reserve, share premium and reduction of paid up capital. Emaar MGF is also reducing its share capital by Rs 821.35 crore to Rs 91.26 crore.
Besides transferring 1,685 acres of land, Emaar, which has an outstanding debt of Rs 4,000 crore, will also transfer Rs 800 crore to Gupta’s MGF Development.
Till the time the separation is formally complete, Emaar PJSC has decided to help Emaar MGF raise debt in the domestic market at a competitive rate by extending guarantee, one of the persons cited earlier said, “Once the process is complete, it (Emaar) will infuse fresh capital that will help reducing the loan. It will help in reducing the Indian partner’s stake in the company by through dilution process,” the person said.
