Godrej Properties to acquire 10% stake in DB Realty for ₹400 crore
DB Realty to also raise Rs456 crore from Prestige Group promoters’ family office
BENGALURU : Godrej Properties Ltd (GPL) on Thursday said it is planning to invest ₹400 crore in Mumbai-based real estate firm DB Realty Ltd, to acquire around 10% stake through the issue of warrants.
According to a regulatory filing, the GPL board granted its approval to evaluate a potential investment in DB Realty in the form of warrants convertible into equity shares and the setting up of a special purpose vehicle as a joint venture with DB Realty to undertake slum rehabilitation and Maharashtra Housing and Area Development Authority redevelopment projects in Mumbai.
GPL and DB Realty will also set up a ₹600 crore equal partnership vehicle focused on redevelopment opportunities in the city.
GPL and DB Realty will invest ₹300 crore each in the joint platform, which will take the former’s total investment up to ₹700 crore.
From the ₹400 crore that GPL will invest in DB Realty, the latter will invest ₹300 back into the redevelopment platform.
The equity platform will act as a strategic special purpose vehicle providing GPL with Right of First Refusal or ROFR for all slum rehabilitation and MHADA redevelopment projects to be identified by DB Realty across Mumbai, under a 50:50 equity partnership with 10% development management fees to GPL.
“The partnership will allow us to explore big opportunities in the redevelopment space in Mumbai. While DB will be look at business development and preparing the projects sites for approvals, Godrej will take on the development, sales and marketing aspects. We expect a booking value of ₹15,000 crore from these projects," Pirojsha Godrej, executive chairman, GPL said in an analyst call on Thursday.
Godrej said under the redevelopment platform, they could do 4-5 projects, each of a million sq ft or more, or even smaller projects.
Separately, DB Realty said in a regulatory filing it will raise funds through issue of warrants from both promoters and non-promoter investors. Goenka Family Trust and SB Fortune Realty Pvt Ltd, owned by promoter groups, will invest ₹160 crore. Among non-promoter investors, GPL will invest ₹400 crore, and existing investor Pinnacle Investments, held by Irfan Razack’s Razack Family Trust and Venkat Narayana, will invest around ₹456 crore. Razack is chairman and Narayana is CEO of Bengaluru-based developer Prestige Group. Post investment, Pinnacle Investments’ stake in DB Realty will go up to 18%.
DB Realty and Prestige Group have an existing partnership where both have undertaken multiple projects in Mumbai and Delhi-National Capital Region (NCR).
Addressing concerns of analysts on GPL’s investment in DB Realty, the promoters of which were accused in the 2G telecom spectrum scam, and the company since then has been inking partnerships to monetize its large land bank, Godrej said it has structurally improved its balance sheet and will reinvestment the capital into the platform.
On Thursday, GPL reported a 171.42% rise in its December quarter net profit to ₹38.95 crore from ₹14.35 crore in the corresponding year-ago period a year ago. Revenue from operations also jumped 63% to ₹278.76 crore in the October-December period from ₹170.49 crore a year ago.
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