The cashless merger will result in a 80.8 million sq. ft portfolio with pan-India presence, including near-completion projects worth ₹6,000 crore, and 3,300 acres of Embassy’s land, besides ongoing project
Embassy Developments Ltd, the joint venture between Indiabulls Real Estate Ltd (IBREL) and two Embassy Group subsidiaries, will have an equity value of ₹9,400 crore.
The cashless merger will result in a 80.8 million sq. ft portfolio with pan-India presence, including near-completion projects worth ₹6,000 crore, and 3,300 acres of Embassy’s land, besides ongoing projects. The new entity’s debt is at ₹4,000 crore.
On Tuesday, the companies said they have entered into a definitive agreement to merge their residential and commercial projects to create one of the largest property development platforms in the country.
The merger is subject to regulatory approvals and is expected to be completed by the second quarter of 2021-22.
According to the terms approved by the boards of the companies, Indiabulls’ shares were valued at ₹92.5 apiece, which is at a 25.7% premium to Tuesday’s closing price. Once the merger is through, it will also mark Indiabulls Group’s exit from the realty business.
“There are a lot of large real estate companies in India that are family-owned. We want to bring in better corporate governance and want to change the way real estate development is done in India and how the business is run. The merged entity, which includes IBREL’s mainly residential projects and Embassy’s land and office projects, will allow more institutional investors to come in at a later stage," said Jitu Virwani, chairman, Embassy. “Given that many developers are cash-strapped today, we believe we were at the right place at the right time because the platform has the ability to grow. Going forward, once we encash the residential inventory, it could be used to selectively buy projects."
Apart from the ₹6,000 crore ready-to-move-in stock, Embassy said another ₹250 crore of investment can realize ₹10,000 crore of surplus from launched residential assets.
The inventory, once sold, will help lower its debt, create cash and look at newer opportunities, Virwani said.
In the proposed listed entity, 44.9% stake will be owned by Embassy promoter entities, 26.2% by existing public shareholders, excluding old and new promoter groups, and around 19.1% stake will be held by the existing international private equity and institutional investors. Around 9.8% will remain with earlier promoter entities.
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