Indiabulls Housing Finance Ltd. agreed to exit the real estate business in a deal with Embassy Group and private equity firm Blackstone nearly three months after the central bank rejected the non-bank lender's merger with The Lakshmi Vilas Bank Ltd.
Indiabulls Real Estate Ltd. agreed to merge with itself certain ongoing, completed and planned residential and commercial projects of Blackstone-backed Embassy Group, according to an exchange filing and a statement. The combined entity will become the development arm of the Embassy Office Parks REIT Ltd. Indiabulls Real Estate will issue shares to the Embassy Group investors. The swap ratio is yet to be fixed.
Embassy Group's parent that will combine with Indiabulls Real Estate will get a cash infusion of Rs 1,420 crore from Blackstone and other investors, Indiabulls Group said in a separate statement.
Sameer Gehlaut-led Indiabulls Housing Finance has been cutting its real estate exposure as it sought the Reserve Bank of India's approval for its merger with the Lakshmi Vilas Bank. That came as the non-bank lender struggled to raise capital after the September 2018 defaults by IL&FS group dried up funding. While the banking regulator rejected the deal without citing reasons in October, the RBI has been historically reluctant to grant banking licence to companies with large real estate exposures.
Indiabulls Real Estate said the proposed merger is also expected to bring capital for the property business. Embassy Group is in discussion with financial investors including Blackstone to raise $200 million before the merger, Indiabulls Real Estate said. That will bring in significant cash to the merged entity for expanding its business operations, it said.
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