Indiabulls Real Estate Ltd, NAM Estates Pvt Ltd (NAM) and Embassy One Commercial Property Developments Pvt Ltd (NAM Opco) (NAM and NAM Opco being subsidiaries of the Embassy Group), announced that they have entered into definitive merger documentation to amalgamate ongoing, completed & planned residential and commercial projects of NAM and NAM Opco (Embassy Assets). Jitendra Virwani along with other promoter entities of NAM (Embassy Promoters) 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 complementary 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 crore for the combined entity.
Jitendra Virwani, Chairman & Founder, Embassy Group said, “This integration provides scale to our two organisations and allows the stakeholders to capitalize on the opportunity created by the market consolidation and dislocations. The transaction also offers growth to the listed entity by combining a portfolio of well-located commercial projects across Mumbai, NCR and Bangalore, which has seen the largest absorption in office space over the past five years. I am excited about the possibilities of what this new combined platform can deliver.”
Sameer Gehlaut, Non-executive Chairman & Founder, IBREL said, “This merger marks the culmination of a journey I began almost 15 years ago to build a world class real estate company. I am excited to be handing over this platform to Embassy who have a proven track record, excellent execution capabilities and who have created a very strong brand and sponsored a successful listed REIT. I believe Embassy promoters are the right partner to make IBREL a larger, stronger and more balance platform in the future. I look forward to working with him as we integrate these two companies.”
Structure & Terms
Under the terms of the agreement, which has been unanimously approved by both Boards of Directors, IBREL’s shares are being valued at Rs 92.5 per share, a 25.7% premium to today’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 Pvt Ltd, which owns the Sky / Sky Forest residential assets, shall swap their shares to NAM Opco and will eventuall 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, the resultant listed entity shall be owned ~44.9% by Embassy Group, 26.2% by the existing public & institutional shareholders, 9.8% by existing IBREL Promoter Group and ~19.1% by BREP & other Embassy institutional investors Management, Governance & Due Diligence When the transaction closes, Jitendra Virwani and the current Embassy promoter entities of NAM shall be the new promoters of IBREL. The merged IBREL shall be run professionally with professional management and strong corporate governance being key focus areas. Both companies have done due diligence on each other’s assets extensively over the past several months.
Approvals
The merger and reclassification of promoter shall be subject to approval of respective creditors and shareholders and applicable regulatory authorities, including but not limited to CCI, stock exchanges, SEBI, NCLT(s) and completion of other agreements integral to the merger. The merger is expected to be completed by Q2 FY 2022.