Embassy Group Announces Merger of Assets with IBREL

Embassy Group, the Bangalore-based real estate developer has announced that it has sign an agreement to merge its various housing and commercial projects with the Mumbai-based Indiabulls Real Estate Ltd (IBREL) and take control of the merged entity. The Group already has around 14 percent stake in IBREL. The same 14 percent will increase to 45 percent after the merger of assets of these two companies.

IBREL as well as Embassy group’s arm NAM Estates (NAM) and Embassy One Commercial Property Developments (NAM Opco) have entered into definitive merger documentation to amalgamate ongoing, completed & planned residential and commercial projects of these two subsidiaries, according to a regulatory filing.

“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 filing said.

The merged entity will have about 30 projects. Under the terms of the agreement, the IBREL’s shares are being valued at 92.5 per share, a 25.7 percent premium to the closing price. The proposed merger will be achieved through a cashless scheme of amalgamation. Not just that, but 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 per cent by Embassy Group, 26.2 per cent by the existing public & institutional shareholders, 9.8 per cent by existing IBREL Promoter Group and 19.1 per cent by BREP & other Embassy institutional investors,” the filing said.

“This integration provides scale to our two organizations and allows the stakeholders to capitalize on the opportunity created by the market consolidation and dislocations.” says Jitendra Virwani, Chairman & Founder of the Embassy Group. The transaction also offers growth to the listed entity by combining a portfolio of well-located commercial projects across Mumbai, NCR and Bangalore, he added.

“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,” states Sameer Gehlaut, Non-Executive Chairman & Founder, IBREL. Embassy group, led by Jitu Virwani, is a major player in Indian commercial real estate. The group, along with Blackstone, launched India’s first Real Estate Investment Trust (REIT) last year to raise 4,750 crore through public issue. It also owns WeWork India.