NEW DELHI: Indiabulls Real Estate and two subsidiaries of Embassy Group have entered into a definitive agreement to merge their residential and commercial projects across markets to create one of the largest property development platforms in the country.
The combined entity will hold both the developers’ ongoing, completed but unsold and planned projects with 80.8 million square feet of development potential.
“The combination will create one of India’s leading real estate development platforms,” said Indiabulls Real Estate in a statement.
“The merged entity will have a balanced mix of commercial and residential assets which should provide a natural hedge against cyclicality and will benefit from the new promoter,” said Jitendra Virwani, Chairman of the Embassy Group.
The proposed merger will be achieved through a cashless structure as Embassy subsidiaries — NAM Estates (NAM) and Embassy One Commercial Property Developments (NAM Opco) — will swap shares with Indiabulls Real Estate.
Under the terms of the agreement, which has been unanimously approved by both boards of directors, Indiabulls Real Estate shares are being valued at Rs 92.5 per share, a 25.7 per cent premium to Tuesday’s closing price.
NAM shareholders will get 6.619 shares of Indiabulls Real Estate for every 10 shares of NAM while NAM Opco shareholders will get 5.406 shares of Indiabulls Real Estate for every 10 shares in NAM Opco.
“This integration provides scale to our two organisations and allows the stakeholders to capitalise on the opportunity created by the market consolidation and dislocations,” said Virwani.
“The transaction also offers growth to the listed entity by combining a portfolio of well-located commercial projects across Mumbai, NCR and Bengaluru which has seen the largest absorption in office space over the past five years.”
Sameer Gehlaut, Non-Executive Chairman and Founder of Indiabulls Real Estate, said the merger marks the culmination of a journey he began almost 15 years ago to build a world-class real estate company.
“I am excited to be handing over this platform to Embassy which has a proven track record, excellent execution capabilities and which has created a very strong brand and sponsored a successful listed real estate investment trust,” he said.
The combined listed entity will be owned 44.9 per cent by Embassy Group, 26.2 per cent by the existing public and institutional shareholders, 9.8 per cent by existing Indiabulls Real Estate promoter group and 19.1 per cent by certain entities controlled by the Blackstone Group Inc, and other Embassy institutional investors.