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As part of its plans to exit the real estate business, India Bulls Real Estate (IBREL) has decided to merge its remaining assets with Bengaluru-based Embassy Property Developments Private Limited in an all-stock deal.
Embassy is in discussions with financial investors such as The Blackstone Group Inc and others to raise up to $200 million before the merger.
On completion of the merger, the Embassy Group will hold controlling stake in the merged entity, while Blackstone will be the second-largest shareholder. Under the proposed merger plan, IBREL will issue its equity shares of face value of ₹2 each to the shareholders of Embassy. The swap ratio would be determined by the Board of both the companies.
Commercial projects
IBREL has delivered about 24 million sq ft of commercial and residential projects and has sold some commercial assets to Blackstone for ₹12,250 crore over the last 2 years. The near completion / under development projects of IBREL aggregating to 32.7 million sq ft is expected to generate sales of ₹22,750 crore and net surplus of over ₹11,000 crore. Additionally, IBREL has a land bank of over 1,900 acres and a SEZ of 1,424 acres.
The merged IBREL will be the development arm for both commercial and residential assets. Certain ongoing, completed and planned residential and commercial projects of Embassy will get merged and stand transferred to IBREL.
Some of Embassy’s assets are presently owned by entities managed and controlled by it jointly with Blackstone, for which it is in discussions with to contribute such assets as part of the merger transaction. Embassy Office Parks REIT, India’s first listed Real Estate Investment Trust (REIT), may benefit from the deal by getting more developed assets thereby increasing the yield.
Final approval
The India Bulls Real Estate Board has constituted a reorganisation committee to evaluate the options to implement the merger proposal, including appointment of valuers, merchant bankers and share swap ratio etc, to be placed before the Board within 4 weeks for its consideration and final approval.
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