Mumbai: Private equity firm Blackstone on Wednesday sold 67 million shares or 8.7% in Embassy REIT worth around $300 million, according to data on stock exchanges. The shares were sold at ₹341 per unit, which is a discount of 6.51% to the closing price of Tuesday.
The funds raised from this trade will be used to pay back its investors.
Shares of Embassy REIT closed at ₹356.27, down 2.33%, on the BSE, on Wednesday, while the benchmark index, Sensex fell 1.58% to close at 34868.98.
At 10:06 am, the shares were at ₹359.82, up 1% from its previous close, while Sensex was down 0.53% at 34685.33.
“The reported transaction significantly increases Embassy REIT’s public float, enhances liquidity and diversifies our investor base. The participation from global investors demonstrates the continuing appeal of the REIT product to existing and new investors as well as the strength and resilience of our business. Blackstone continues to be the single largest investor underlining their commitment to the Embassy REIT," said a spokesperson for Embassy REIT.
Blackstone will continue to remain the largest shareholder in the REIT, even as its stake dropped to 46.6% from 55.3%. Morgan Stanley was the broker for the block deal.
Existing investors, including Capital Group, Canada-based CI Investments Inc and ICICI Prudential Asset Management Co., increased their stake in Embassy REIT by participating in the block deal. New investors added to the list are Brookfield, Nomura Asset Management, Norges Bank and Prudential Securities.
“We continue to be big believers in India and its potential. We have significant confidence in the office sector and Embassy REIT given growing demand from domestic and global companies for Indian talent, particularly in technology hubs like Bangalore. This transaction helps diversify institutional ownership and improve liquidity. We remain the largest shareholder of Embassy REIT and are quite optimistic about its future," said Jonathan Gray, president and chief operating officer of Blackstone.
Embassy REIT unit prices fell last week after speculation that IBM was considering ending office leases owing to the work-from-home trend in the wake of the coronavirus pandemic. IBM is the single largest tenant for Embassy REIT contributing 12% of its total rental revenues. IBM, in a statement, said the speculation was inaccurate.
From the beginning of the year, Embassy REIT has fallen 16.20% against a drop of 15.48% in the benchmark index, Sensex. From March lows Embassy REIT gained 18.36% and Sensex gained 34.73%.
For the quarter ended 31 March 2020, Embassy REIT reported a consolidated net profit of ₹57.81 crore against a loss of ₹9.45 crore for the same quarter last year.
(Bloomberg contributed to the story)