NEW DELHI: Realty firm Embassy Group on Thursday said it expects to complete the process of merger of its certain housing and commercial projects with Gurugram-based Indiabulls Real Estate by the end of this year.
The Competition Commission of India (CCI) on Wednesday approved the proposed merger of Embassy group firms NAM Estates Pvt Ltd and Embassy One Commercial Property Developments Pvt Ltd with Indiabulls Real Estate Ltd (IBREL).
The merger will be done through a cashless scheme of amalgamation as the two Embassy Group’s subsidiaries—NAM Estates (NAM) and Embassy One Commercial Property Developments (NAM Opco) — will swap shares with IBREL. NAM shareholders will get 6.6 shares of IBREL for every 10 shares of NAM and NAM Opco shareholders will get 5.4 shares of IBREL for every 10 shares in NAM Opco. IBREL’s shares are being valued at Rs 92.5 per share, a 25.7% premium to closing price of August 18, 2020.
In August, Embassy Group entered into a definitive agreement to merge its certain residential and commercial projects with IBREL through a cash-less scheme of amalgamation. Embassy Group will become the promoters of the merged entity.
“With the scheme has received necessary approvals from CCI, SEBI & the stock exchanges and definitive agreements entered with BREP (Blackstone entities) and other institutional investors, the merger is now fully on track to fruition.
Embassy Group has around 14 per cent stake in IBREL and the same will increase to 45 per cent after the merger of assets of these two companies. Post-merger, the combined entity will have 80.8 million square feet of launched and planned development potential. The merged entity will have about 30 projects.
Under the terms of the agreement, the IBREL”s shares are being valued at Rs 92.5 per share.
Embassy Group is a major player in Indian commercial real estate. The group, along with Blackstone, launched India”s first Real Estate Investment Trust (REIT) in 2019 to raise Rs 4,750 crore through public issue. It also owns WeWork India.
The Embassy Group entered into definitive agreement with IBREL to merge its certain residential and commercial projects with IBREL through a cash-less scheme of amalgamation whereby Embassy Group shall become the promoters of the merged entity upon effectiveness of the merger. Further, as part of the merger process, certain entities controlled by BREP would also contribute certain identified residential projects to the merger through a share swap arrangement with Embassy Group entities, subject to the satisfaction of certain conditions.
The resulting combined entity, Embassy Developments Limited, will hold both Embassy Group’s and IBREL’s ongoing, completed but unsold and planned projects with 80.8 million sq ft of development potential, thus becoming one of the largest property development platforms in the country. The combined entity shall benefit from a complementary pan-India presence across key markets including a strong presence in the commercial and residential market of Bengaluru, Mumbai and NCR. The merger shall provide diversification to IBREL shareholders through a balanced mix of residential and commercial development with visibility on near term liquidity through sold receivables in excess of Rs. 4,220 crore for the combined entity.
Individually, both IBREL and Embassy Group have shown exceptional resilience and turnaround from the pandemic related market dislocations. IBREL recorded one of its highest quarterly sales figures in the past quarter at Rs. 9,905 million and dominated the Mumbai premium luxury market with its sales of iconic Indiabulls Blu Estate & Club residential towers in Worli. Embassy Group projects have shown a similar significant sale uptake in the same period within the Bangalore market.
Jitendra Virwani, Chairman & Founder of the Embassy Group said, “With the Scheme having received necessary approvals from CCI, SEBI & the stock exchanges and definitive agreements entered with BREP and other institutional investors, the merger is now fully on track to fruition. We hope to complete the process by the third quarter of FY 22”.
Mehul Johnson, Joint Managing Director of IBREL said, “Embassy Group completing the execution of definitive agreements with institutional investors, including BREP, to participate in the merger and the Scheme receiving required approvals from CCI, SEBI & the stock exchanges in a timely manner are significant achievements and a significant step closer to the completion of the merger. These institutional investors bring with them strong corporate governance standards and best practices and will only further enhance value for shareholders of the combined entity in the long term”.