Stake churn at Indiabulls arms

Mumbai: Global private equity firm Blackstone Group is acquiring a 50 per cent stake in two arms of Indiabulls Real Estate (IBREL) for an enterprise value of $1.46 billion (Rs 9,500 crore).

Proceeds of the sale will be used to trim the debt of IBREL and its subsidiaries.

The two companies in which Blackstone will be acquiring the stake are Indiabulls Properties Pvt Ltd (IPPL) and Indiabulls Real Estate Company Pvt Ltd (IRECPL).

IBREL told bourses in a late evening filing on Friday that after the conclusion of the transaction, the company would cease its sole control over these two companies. Ahead of the announcement, the IBREL stock ended with a loss of 4.44 per cent at Rs 191.45.

"The company's wholly owned subsidiaries, pursuant to their respective board authorisations, have executed definitive transaction documents with the entities controlled by Blackstone Group L.P... to divest their entire holding in certain subsidiaries and thereby indirectly divesting 50 per cent stake in (IPPL) and IRECPL at an aggregate enterprise value of approximately $1461.5 million equivalent to Rs 9,500 crore,'' IBREL said.

IBREL's annual report for 2016-17 showed that its proportion of ownership interest in the two arms stood at 54.95 per cent.

The assets that will be part of the transaction include the One Indiabulls Centre and Indiabulls Finance Centre in Mumbai.

It is not immediately clear if the commercial real estate property One Indiabulls Park in Chennai is also part of the transaction.

While the two properties in Mumbai have a leaseable area of 3.3 million sq ft, the one in Chennai has a leaseable area of 1.9 million sq.ft.

After it declared the third-quarter results ended December 31, 2017, IBREL had said the projected annuity revenue of these three properties would be Rs 813 crore by 2020-21.

Last month, the board of directors of IBREL had given the green signal for the sale of its residential and commercial assets in Chennai as the region was a "non-core" market for the company's real estate operations.

"Substantial part of the sale proceeds would be utilised towards repayment of existing debts of the company and its subsidiaries, and for achieving sustainable long-term growth and for further strengthening of their on-going businesses. Subject to the satisfaction of customary closing conditions, the transaction is expected to be concluded during this financial year,'' IBREL said.

In the nine-month period, the cash and cash equivalents stood at around Rs 1,100 crore.

During the third quarter of this year, Indiabulls Real Estate had posted a consolidated net profit of Rs 85.3 crore compared with Rs 58.6 crore in the same period a year ago. Revenues jumped to Rs 2,100 crore from Rs 300 crore a year ago.

The company then said that it had various ongoing projects which had a total saleable area of around 34 million square feet.


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