BackIndiabulls’ promoters go separate ways
Chairman Sameer Gehlaut to control finance businesses; directors Rattan, Mittal take over infrastructure, power
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Mumbai: The promoters of the Indiabulls Group, which has interests in housing finance, real estate, securities and power, have decided to split by restructuring the conglomerate, 14 years after they came together to create it, the group announced on Wednesday.
In a notice to the BSE, the group said that the promoters have “mutually agreed" to restructure the business units of the group by segregating responsibilities of the top management in order to give each business focused attention. The restructuring is effective from 9 July.
As part of the restructuring, chairman and co-founder Sameer Gehlaut will continue to control the housing finance, real estate, securities and wholesale trading business segments of the group, headed by its flagship companies, namely Indiabulls Housing Finance Ltd (IBHFL), Indiabulls Real Estate Ltd, Indiabulls Securities Ltd and Indiabulls Wholesale Services Ltd.
Rajiv Rattan and Saurabh Mittal, directors of these companies, have relinquished all their control and resigned from posts held in IBHFL and Indiabulls Real Estate.
Meanwhile, Gehlaut has relinquished his office as chairman and as a director of Indiabulls Power, leaving the business in the hands of Rattan. Rattan and Mittal will also control Indiabulls Infrastructure and Power Ltd.
In a press statement, the group said that, “The Board of IBHFL wants to delink ownership from management and has decided to elevate the current CEO, Gagan Banga as the Vice Chairman and Managing Director of the company." Banga is a long-time associate and close confidant of Gehlaut.
“This development and the resultant consolidation of control and importantly, reduction in the number of controlling promoters, is going to vastly aid the process of transforming IBHFL into a strong financial institution, and ring-fencing and insulating it from the other businesses the group was engaged in," Banga said.
In the statement, the group said that Rattan and Mittal shall not have any rights or interests in the Indiabulls brand. Indiabulls Power and Indiabulls Infrastructure and Power will be rebranded by Rattan and Mittal before 31 December 2014.
While the statement did not say whether there would be any change in the equity held by each of the promoters in the listed entities, large block deals involving shares of the listed entities of the group have been reported.
According to Bloomberg, 9.76 million shares (2.3% of equity) in Indiabulls Real Estate changed hands via a block deal. In Indiabulls Infrastructure, 7.1% equity was traded via two block deals. 2.21 million shares (0.66% of equity) of Indiabulls Housing and 4.04 million shares (7.99% of equity) of Indiabulls Wholesale Services were also traded via block deals.
However, the details of the participants of the sales do not clearly indicate the identity of the sellers and buyers.
An analyst who attended the group’s conference call on Wednesday said there would be a transfer of holdings between the promoters and that Gehlaut would swap his stake in the companies controlled by Rattan and Mittal and vice versa. The group provided no more details of the swap, the analyst added.
A real estate analyst with a foreign brokerage said that this is a situation where the promoters have decided to pursue different tracks and have parted ways. This person, who asked not to be identified, added that it is not possible to gauge the impact on the group.
In the mid-1990s, Gehlaut and his friend Rattan, both graduates from the Indian Institute of Technology (IIT), Delhi, got together and bought a defunct securities company, offering brokerage services. A few months later, their friend Mittal, another IIT-ian also joined them. In January 2000, the three founders incorporated Indiabulls Financial Services.
In mid-2000s, Indiabulls Financial Services received venture capital funding from L. N. Mittal and Harish Fabiani. In September 2004, Indiabulls Financial Services went public with an initial public offer and subsequently added new lines of businesses, including real estate and power generation.
According to the company’s website, the group has a net worth of ₹ 19,320 crore
“The reorganization will also enable the group to continue with its efforts of ring-fencing IBHFL from contagion risks of any other business besides bringing in specialized focus towards the real estate business and power business," the group said in the statement.
Shares of Indiabulls Infrastructure and Power lost 4.95% to close at ₹ 5.95 per share on Wednesday on the BSE, while the benchmark index, Sensex, lost 0.54% to close at 25444.81 points. Indiabulls Power lost 4.99% to close at ₹ 13.13 per share, Indiabulls Real Estate lost 2.23% to close at ₹ 83.35 a piece, Indiabulls Securities lost 2.52% to close at ₹ 25.15 per share, Indiabulls Housing Finance lost 0.18% to close at ₹ 355.95 per share and Indiabulls Wholesale Services Ltd fell 7.78% to close at ₹ 24.90 per share.
pr.sanjai@livemint.com
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