Indiabulls Real Estate Ltd. decides to sell stakes in commercial and leasing business assets to any third-party investor or internationally renowned private equity firm at an equity valuation of around Rs 4,400-4,800 crore, according to an exchange filing. The decision is being made in order to be debt-free in the ongoing financial year.
The selling includes the sale of its 50 percent stake in a joint venture with Blackstone Group LLP, which houses the flagship ‘Sky’ projects and other commercial assets.
The company will also divest the London Hanover Square property for an enterprise value of £200 million (about Rs 1,730 crore), subject to applicable regulatory and corporate approvals. The London property market, it said, remains sluggish on account of continuing Brexit related issues and uncertainties around it.
“These will generate more than Rs 6,000 crore, thereby reducing the net debt of Indiabulls Real Estate to zero in the current financial year and leaving surplus cash for further growth of the company,” a statement by the company read.
Currently, the company has a net debt of Rs 5,000 crore, according to CLSA.
After the divestments, Indiabulls Real Estate will be left with a few residential projects, mainly in Mumbai (Central Mumbai and Mumbai Metropolitan Region) and National Capital Region (Gurgaon).
The company will have a de-risked balance sheet and a large land-bank in Mumbai Metropolitan Region and National Capital Region, offering good long-term prospects, CLSA analyst Abhinav Sinha said in a note. Still, the brokerage cut its target price on the stock to Rs 120 from Rs 150, citing “limited development business traction”.
Promoters of Indiabulls Real Estate are looking to pare their holding in the company to comply with the Reserve Bank of India’s norms for a proposed merger of Indiabulls Housing Finance Ltd. with Lakshmi Vilas Bank. In June earlier this year, Bangalore-based Embassy Property Developments Pvt. Ltd. bought a 13.9 percent stake in Indiabulls Real Estate via a block deal. After this, promoters’ holding fell to 23.38 percent. No further disclosures have been made since then.
Indiabulls Real Estate said they will focus on its core markets—Mumbai Metropolitan Region and National Capital Region—for sustainable growth and strengthening of its ongoing businesses. It will also focus on asset light model through a joint venture with landowners and other developers without incurring significant upfront land acquisition cost.
Shares of the company dropped as much as 4 percent in early Friday trade compared with a 0.68 percent fall in the benchmark NSE Nifty 50 Index.
