Mumbai: A clutch of investors, including billionaire investor Rakesh Jhunjhunwala and D-Mart retail chain promoter Radhakrishna Damani, has agreed to pick up an 11% stake in Mumbai-based real estate and hospitality firm Delta Corp. Ltd for Rs 200 crore, a banker and a company executive familiar with the development said.
The investors will purchase the stake for Rs 120 crore and subscribe to Rs 80 crore of warrants that can be later converted into stock.
Alchemy Shares and Stock Brokers Pvt. Ltd was the exclusive adviser on the deal.
Corporate lawyer Zia Mody of AZB Partners and her husband Jayadev Mody will invest Rs 70 crore as part of the promoters’ contribution. The couple collectively own 47.81% in Delta Corp.
According to information available with the Bombay Stock Exchange (BSE), Jayadev Mody owned 11.73% stake in Delta Corp. as of 30 June, and Zia Mody, 36.08%. Private equity firm ICICI Ventures Ltd owned a 12.15% stake.
The company executive mentioned earlier said an announcement on the deal will be made on 21 September.
Jhunjhunwala, a legendary figure in investing circles for his knack of buying stakes at low prices and selling high later, will invest Rs 76.5 crore in Delta Corp. and join its board. Damani will put in Rs 25.5 crore.
Delta Corp. will use the money to acquire stakes in casinos in Goa and Daman, the banker mentioned earlier said. He declined to be identified as he is not authorized to speak to the media.
Delta Corp. has interests in gaming, hospitality and real estate, operates offshore and onshore casinos in Goa, owns a real estate company in East Africa through a 40:60 joint venture with Reliance Industries Ltd’s chairman Mukesh Ambani, owns a 35% stake in Advani Hotels and Resorts (India) Ltd, and offers chartered flights through AAA Aviation Pvt. Ltd.
On Friday, the company informed BSE its board would meet on 20 September to consider a preferential allotment to one or more investors to raise up to Rs 275 crore.
In an investor presentation soon after it announced its annual results in May, Delta Corp. said it was in the final stages of acquiring its third licence for an offshore casino. It also proposed to add a mainland casino in southern Goa, in addition to its casino in the northern part of the state.
The presentation also mentioned the company would capitalize on the synergies of its hospitality business with the casino business.
Delta Corp. East Africa Ltd, its real estate joint venture, has invested Rs 200 crore to acquire nine parcels of land, totally about 803,000 sq. ft., in prime locations in the Kenyan capital of Nairobi to develop commercial and residential properties. “Three projects are under development,” the company told its investors in the presentation.
For the quarter ended June, Delta Corp. reported a consolidated net profit of Rs 4.28 crore, a 81% increase over the corresponding period in the previous fiscal.
The largest share of revenue for the quarter came from its hospitality and casino businesses, which together contributed Rs 22.48 crore.
The real estate and lease rental divisions generated revenue of Rs 3.56 crore and Rs 5.76 crore, respectively.