Making a complete exit from real estate business, Gurugram-based Indiabulls Group has decided to merge Indiabulls Real Estate Ltd.’s (IBREL) all ongoing, completed and planned residential and commercial projects with two subsidiaries of Bengaluru-based Embassy Group. The merger will be done through a cashless scheme of amalgamation as the two Embassy Group’s subsidiaries—NAM Estates (NAM) and Embassy One Commercial Property Developments (NAM Opco) — will swap shares with IBREL. NAM shareholders will get 6.6 shares of IBREL for every 10 shares of NAM and NAM Opco shareholders will get 5.4 shares of IBREL for every 10 shares in NAM Opco. IBREL’s shares are being valued at Rs 92.5 per share, a 25.7% premium to closing price of August 18, 2020.

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The combined entity, to be called Embassy Developments Ltd, will catapult into one of the country’s leading real estate players. The merger will create one of the leading market players among listed companies in the real estate sector in terms of surplus from launched projects, land bank ownership and residential stock and planned area development in the country. As per the stock exchange filing, it will have around 81million square feet of launched and planned development potential across the country. The merged entity, which will have about 30 projects, will be owned 44.9% by Embassy Group, 26.2% by the existing public and institutional shareholders, 9.8% by existing Indiabulls Real Estate promoter group and 19.1% by Blackstone and other Embassy institutional investors.

The merger is expected to be completed by the second quarter of next financial year. In fact, Indiabulls group had made its decision to sell off its real estate business last year as it had planned to enter the banking space by acquiring Lakshmi Vilas Bank. However, the merger move was blocked by Reserve Bank of India because of the group’s exposure to the realty sector.

Indiabulls exiting real estate business

Indiabulls’ real estate business does not account for more than 15% of the group’s total revenue. To be sure, after the RBI (Reserve Bank of India) rejected Indiabulls Housing Finance Ltd.’s proposed merger with Lakshmi Vilas Bank, the company decided to completely exit the real estate business and make IBREL debt-free. With no exposure to the property business, Indiabulls can now relook at the merger plan with Lakshmi Vilas Bank and seek RBI’s approval again. Recently, Indiabulls Housing Finance appointed former RBI deputy governor S. S. Mundra as the non-executive chairman.

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