Embassy Group, Indiabulls Real Estate to merge assets

Indiabulls Real Estate (IBREL) and two subsidiaries of the Bengaluru-based Embassy Group — NAM Estates Pvt Ltd (NAM) and Embassy One Commercial Property Developments Private Limited (NAM Opco) — on Tuesday announced they have entered into definitive merger documentation to amalgamate ongoing, completed and planned residential and commercial projects.

Jitendra Virwani along with other promoter entities of NAM will become the new promoters of IBREL upon completion of merger, and Sameer Gehlaut along with existing IBREL promoter group entities shall initiate the process of reclassification as required.

The combined IBREL entity shall become one of India’s leading real estate development platforms, with 80.8 million square feet of launched and planned development potential. The combined entity shall benefit from a pan-India presence across key markets including a significant presence in the commercial and residential market of Bengaluru.

“The merger shall provide diversification to IBREL shareholders towards a balanced mix of residential and commercial development with visibility on near term liquidity through sold receivables in excess of Rs. 4,220 crores for the combined entity,” company said in a statement.

Under the terms of the agreement, IBREL’s shares are being valued at Rs 92.5 per share, a 25.7% premium to Tuesday’s closing price. The proposed merger will be achieved through a cashless scheme of amalgamation.

As part of the combination, certain private equity shareholders of Indiabulls Properties Private Limited, which owns the Sky and Sky Forest residential assets, shall swap their shares to NAM Opco and will eventually merge into IBREL by virtue of a National Company Law Tribunal (‘NCLT’) approved scheme of arrangement.

NAM shareholders will get 6.619 shares of IBREL for every 10 shares of NAM whilst NAM Opco shareholders will get 5.406 shares of IBREL for every 10 shares in NAM Opco.

Subsequent to the merger being effected, Embassy Group will own around 44.9% in the resultant listed entity, 26.2% will be owned by the existing public & institutional shareholders, 9.8% by existing IBREL promoter group and about 19.1% by BREP & other Embassy institutional investors.