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Property developer Godrej Properties has decided not to go ahead with its planned investment in DB Realty after stakeholders and minority investors raised concerns on the proposed deal.
The deal was made public after close of trade yesterday. Godrej Properties’ stock plunged 10.13 per cent in intraday on Friday before closing 9.75 per cent down compared to the previous day.
“After prolonged discussions and taking into consideration the feedback from the stakeholders and minority investors, the Board has decided not to proceed with any further evaluation of potential investment in the equity capital of the DB Realty and the platform,” Godrej Properties said in a release today.
Godrej Properties claimed to have received substantial feedback and views from its stakeholders and minority investors raising concern on the proposed transaction with DB Realty, including with respect to the structure of the deal, rationale for the investment in DB Realty and merits of investing through the platform.
On February 3, Godrej Properties (GPL) said it planned to pick up 10 per cent stake in DB Realty for ₹400 crore. The two companies also separately agreed to set a special purpose vehicle to undertake slum rehabilitation and MHADA redevelopment projects.
GPL was to subscribe to warrants convertible into equity shares aggregating to approximately 10 per cent of the issued and paid-up capital of DBR. The warrants were expected to be subscribed to on or before September 2023. The conversion into equity shares would have happened in various tranches within the maximum period of 18 months.
The equity platform would have acted as a strategic special purpose vehicle providing GPL with ROFR (Right of First Refusal) for all slum rehabilitation and MHADA redevelopment projects to be identified by DB across Mumbai under a 50:50 equity partnership with 10 per cent development management fees to GPL.
GPL further added today that it may, however, continue to explore the possibility of evaluating projects with DB Realty on a case to case basis.
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