Embassy Group to merge 62 million sq ft realty assets with Indiabulls Real Estate

MUMBAI | BENGALURU: Realty developer Embassy Group and Indiabulls Real Estate will amalgamate their real estate assets under a deal that will see the Indiabulls Group’s exit from the realty business.
The definitive agreement for the merger is expected to be placed before the listed company's board by August 15, Indiabulls Real Estate said in a stock exchange filling on Wednesday. As per the plan, Embassy’s 62 million sq ft of real estate assets will be merged with the Mumbai-based company’s 31 million sq ft of assets under development.

After the merger, Indiabulls’ promoter Sameer Gehlaut will hold less than 10% in the combined company, where Embassy Group chairman Jitendra Virwani and his family will own about 30% and institutional investors around 35%, said three people with direct knowledge of the development.

“As part of the merger, institutional investors including the Blackstone Group and a fund of HDFC Property Ventures will also become key shareholders … Blackstone will also be infusing fresh funds,” said one of the people.

Both entities already hold stakes in Embassy’s projects, which will be merged with Indiabulls Real Estate.

After the merger is complete, Embassy’s Virwani and its other promoter entities will become the new promoters of the amalgamated company, Indiabulls Real Estate said.

“This merger with Indiabulls will strengthen our presence across locations in the country. It will also create a platform for future development in partnership with institutional investors,” Virwani told ET, without elaborating on the participation of institutional investors.

An email seeking comment to Blackstone remained unanswered at press time Wednesday. HDFC declined to comment.

Indiabulls Real Estate informed stock exchanges that the merger with Embassy Group had progressed into the final stage, concluding the due-diligence and commercial discussions.

The merged entity will be the development arm for the Embassy Group, and provide a mechanism to seed assets to their Embassy-Blackstone REIT, India’s maiden real estate investment trust (REIT) that was listed last year.

Currently, the REIT has a market cap of more than Rs 26,000 crore.

Private equity major Blackstone and HDFC Property Fund’s HIREF International LLC will be the anchor investors in the proposed development platform.

The new entity is aiming to solidify its presence as a real estate development platform with a focus on metro cities including Mumbai, Bengaluru and the National Capital Region.

Indiabulls Real Estate has access to a land bank of 1,900 acres and the 1,424-acre Nashik SEZ, which will provide further development potential for the merged entity.