Embassy Group initiates to merge with Indiabulls real estate for 11 Projects

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Embassy Group or Embassy Property Developments Pvt. Ltd is a Bengaluru based realty organization that has proposed to merge around eleven real estate projects comprising nearly 62 million sq. ft area with Indiabulls Real Estate (IBREL).

They intend to take control of the merged entity. Embassy Group already has around 14% stake in Mumbai based IBREL, which is part of the Indiabulls group. After this proposed merger plan gets concluded, Embassy Group will have a controlling stake and become a promoter of the merged entity.

Indiabulls Real Estate (IBREL) stated that a panel will be constituted to value the projects proposed to be merged and arrive at a swap ratio. In June 2019, the promoters of Indiabulls Real Estate (IBREL) sold 14% stake through open market transactions to Embassy Group for Rs 950 crore, as part of their strategy to focus on financial services and exit from real estate firm.

Indiabulls Real Estate (IBREL) in January 2020 had announced its proposal of merging the project. IBREL is ready to merge their projects with certain ongoing, completed, and planned residential and commercial projects of Embassy Property Developments Pvt Ltd. In a regulatory filing, IBREL stated it has received the proposal from Embassy detailing their various assets for the merger of the Embassy with itself.

The filing stated that “To supply impact to the amalgamation, the board-constituted committee of the corporation is taking required steps which includes the appointment of service provider bankers, legal professionals and valuers to arrive at the swap ratio and definitive agreements, to be positioned earlier than the Board for their approval in 4 weeks from today,”. And moreover, the proposed merger will be carried out via a cashless scheme of amalgamation.

On the filing of the scheme of amalgamation with the relevant regulatory authorities, Sameer Gehlaut, as a promoter, along with the other existing promoter group entities of the Indiabulls Real Estate (IBREL) would initiate the process of de-promoterisation. After the scheme of amalgamation is successful, Jitendra Virwani along with his other promoter entities will be the new promoters of the amalgamated firm.

Indiabulls Real Estate has access to a land bank of 1,900 acres and the 1,424-acre Nashik SEZ, which will provide further development potential for the merged entity.

The embassy and the financial investor will receive shares of IBREL, according to the share swap ratio approved by the two companies. In June, IBREL had said that with the lockdown relaxations, efforts are being made by Embassy and IBREL to execute transaction documents on or before 15 July.

With this proposed merger deal, Embassy Group seeks to enter into Delhi and Mumbai -NCR markets, the two biggest property markets in the country. Sources had stated earlier that the Indiabulls Group aims to merge over a dozen remaining assets of Indiabulls Real Estate (IBREL) with a new entity that will be led by the Embassy Group. Before this merger proposal with the Embassy Group, Indiabulls Real Estate (IBREL) sold many commercial assets to global investment firm Blackstone.

The merged entity will be the development arm for the Embassy Group and provide a mechanism to seed assets to their Embassy-Blackstone REIT, India’s maiden real estate investment trust (REIT) that was listed last year. Currently, the REIT has a market cap of more than Rs 26,000 crore. Private equity major Blackstone and HDFC Property Fund’s HIREF International LLC will be the anchor investors in the proposed development platform.

The new entity is aiming to solidify its presence as a real estate development platform with a focus on metro cities including Mumbai, Bengaluru, and the National Capital Region.

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