Bangalore : Ishaan Real Estate Plc, which trades on London’s Alternate Investment Market (AIM), plans to sell its property interests to Chalet Hotels Pvt. Ltd and associated entities for an estimated £70.3 million in cash and subsequently stop trading on the exchange.
Ishaan Real Estate said that its board is in advanced talks on this issue, according to a 21 February statement issued to shareholders.
This transaction provides the opportunity to realize value from all the property interests, the company said.
Deutsche Bank AG is advising Ishaan Real Estate and NM Rothschild and Sons Ltd is the financial adviser to Chalet Hotels, a company owned by Mumbai-based real estate firm K Raheja Corp.
Ishaan Real Estate, which was founded in 2007, picked up stakes in multiple projects of K Raheja Corp in India. K Raheja Corp is run by billionaire Chandru Raheja and his sons, Ravi and Neel.
In 2007-08, Ishaan and K Raheja Corp. co-invested in around six projects, including residential and office space and shopping malls, in west and south India. At a project or special purpose vehicle (SPV) level, Ishaan and K Raheja Corp held a 40:60 equity shareholding.
After the sale, Chalet Hotels will own a 40% stake in these projects. Most of the projects are under construction and are due for completion in 2014.
A K Raheja Corp executive, who didn’t want to be named, said the transaction process has been under way for a while now and will conclude shortly.
“This is the easiest and quickest way in which investors in Ishaan could get an exit,” said a property analyst, who declined to be named.
On 11 December, as part of Ishaan’s interim report for the six months ended 30 September, the board reiterated its focus on the sale of assets and the return of cash to shareholders.
“In the event that shareholders approve the disposal and completion of the disposal occurs, it is the board’s intention to distribute all of the estimated net cash resources to shareholders as soon as practically possible,” the statement said.
A second extraordinary general meeting will be required to seek shareholder approval for the voluntary winding up and cancellation of the company’s admission to trading on AIM.
The company has cited reasons such as limited interest from third-party purchasers in acquiring interests available in the projects and the Vivarea high-end residential project behind the sale of Ishaan’s property interests.