Real estate developer Embassy Group is planning to retain its 14% stake in Indiabulls Real Estate Ltd even though the Reserve Bank of India (RBI) has reversed the listed player's plan to merge with Lakshmi Vilas Bank.
Indiabulls Group divested stake in the real estate arm to Embassy Group in the run up to its merger with Lakshmi Vilas Bank. The latest decision by the RBI has put a stop to its plan, raising questions about whether Indiabulls will take control of its real estate venture.
Jitu Virwani, chairman at Embassy Group, said the firm is not looking at increasing or exiting its investment in Indiabulls, The Economic Times reported.
In June, Embassy Property Developments Pvt. Ltd bought about 14% stake in Indiabulls Real Estate. As per the plan, Embassy had to acquire the remaining 24% stake held by promoters in Indiabulls Real Estate over the next few months. This had to be followed an open offer, which will conclude by end of this year.
In its effort to completely exit real estate business, Indiabulls sold its stake in the remaining commercial real estate portfolio. In September, Blackstone bought 50% stake in Indiabulls Real Estate’s office assets for Rs 4,420 crore ($616 million).
The private equity firm last year bought a 50% stake in two units of Indiabulls Real Estate. The deal included Indiabulls Finance Centre and One Indiabulls Centre in Mumbai, and two key commercial properties in the country's financial capital.
In a separate development post cancellation of its merger plans, Indiabulls Real Estate said it would buyback of up to 5 crore shares at Rs 100 each, which could cost the company up to Rs 500 crore.
As per the current shareholding, promoters have 23.36% stake in Indiabulls Eeal Estate, while Bengaluru-based Embassy Group has nearly 14% shareholding.