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Indiabulls Real Estate stake sale to Blackstone-Embassy JV likely to be concluded by July end

The stake sale was undertaken by Indiabulls to focus fully on its financial services as it seeks to merge with Lakshmi Vilas Bank.

Vandana Ramnani @vandanaramnani1
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The promoters of Indiabulls Real Estate have sold around 12 percent of their stake in the company to the Embassy group, and the entire stake sale is likely to be concluded by end of July, sources told Moneycontrol.

“This is going to be in tranches. Anywhere between 12 to 13 percent stake was sold today to the Embassy Group. There would be a couple more tranches and the entire process is likely to be over by end of July,” Ajit Mittal, executive director of the Indiabulls group, confirmed to Moneycontrol.

“Sameer Gehlaut would exit the real estate business development part and focus on the financial services business, which is what the group is predominantly focusing on and eventually the bank. This was perceived as one of the stumbling blocks because the RBI had some apprehensions that the group had a real estate business. We had to face an obstacle in 2013,” he said.

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Media reports noted that the Indiabulls Group is planning to exit the real estate business with the sale of co-founder and chairman Sameer Gehlaut’s 39 percent stake for Rs 2,700 crore to US-based private equity firm Blackstone and its local partner Embassy Group. The stake sale was undertaken by Indiabulls to focus fully on its financial services as it seeks to merge with Lakshmi Vilas Bank.

“We are into insurance business, we are the largest mortgage lender. In any case real estate was a miniscule part of the business. Real estate was not very high on the value chain,” he said.

“Today’s transaction was with Embassy. Blackstone has in any case been involved with us – they are 50 percent partners in the rental assets the group has in Mumbai, Chennai and in Gurgaon. They are not new to us. They have been associated with us for a long time. Now they are joint venture (JV) partners with Embassy as well for their Real estate investment trust (REIT). They will be getting synergies under this platform. The entire process will be over by July end,” he told Moneycontrol.

“The idea is that after the stake sale, Sameer Gehlaut will cease to be the promoter and the real estate company will not part of the Indiabulls Group. It is then after Embassy and Blackstone as to how these assets will be appropriated,” he added.

The Embassy Group’s comments are awaited.

Blackstone owns 50 percent of Indiabulls’ commercial portfolio, including two properties in Mumbai’s Lower Parel and Prabhadevi apart from a project in Gurgaon. Blackstone has also acquired the Chennai commercial property developed by Indiabulls Real Estate.

In April this year, Blackstone-Embassy’s joint venture Embassy Office Parks listed India’s first REIT. This has 33 million sq ft of office and hospitality assets, comprising seven business parks and four buildings in Mumbai, Bengaluru, Pune and Noida. The REIT raised over Rs 4,700 crore through the issue that was subscribed more than 2.5 times.

vandana.ramnani@nw18.com

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First Published on Jun 7, 2019 03:01 pm
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