Kolkata: Mumbai-based real estate developer, The Phoenix Mills Ltd, has struck a deal to acquire a 25-acre plot in Rajaji Nagar in Bangalore for around Rs320 crore from beleaguered engineering firm GKW Ltd. And, while it was negotiating the deal, Phoenix Mills and its subsidiary Bellona Finvest Ltd also built a 7.5% equity interest in GKW.
When contacted, Phoenix Mills’ managing director Ashok Kumar R. Ruia confirmed his company had bought some 4.5 million shares of GKW from the market, noting: “We are interested in GKW’s land bank.” As to the specific land deal, Ruia said an announcement about the deal would be made in the “next couple of days.”
At the current market price of GKW—Rs90.45 a share—the stake is valued at Rs40.72 crore. It is unclear what Phoenix paid for its shares.
GKW chairman K.K. Bangur couldn’t immediately be reached and calls made to his office weren’t returned. He had, however, indicated in the past that his company was looking to sell the plot.
Phoenix Mills is said to have teamed up with a UK-based real estate fund to acquire the Bangalore land. Ruia said he couldn’t disclose the fund’s name. The two paid Rs13-14 crore an acre for the plot, according to people familiar with the deal, though Ruia declined to discuss the price.
The price per acre cited was a reasonable price for land in industrial areas of Bangalore that are being redeveloped, said Manisha Grover, who is a joint managing director of real estate consultant Jones Lang LaSalle Meghraj. She wasn’t talking specifically of the Phoenix transaction.
Elaborating on his company’s interest in GKW’s land bank, Ruia said GKW had large tracts of land in Kolkata, Pune and Mumbai. “They (GKW) are not allowed to sell them at present,” he claimed. “But, if they are cleared for sale in future, we might consider buying them.”
Among the most attractive properties that GKW owns is a 34.5-acre plot in Bhandup in Mumbai and a 74-acre plot on the western fringes of Kolkata.
A little more than a month ago, GKW came out from under the supervision of the Board for Industrial and Financial Reconstruction (BIFR) after its net worth turned positive. The company had told BIFR in July 2005 it would sell its assets and repay creditors.
Employees, however, are opposed to the proposed sale because they fear job cuts. The company has been trying to reach a settlement with them. Formerly called Guest Keen Williams, GKW was the Indian subsidiary of a UK-based engineering company.