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Nitesh Estates to buy back 10.1% stake in residential projects arm from HDFC AMC for $8.3M

Bangalore-headquartered property development and management company Nitesh Estates Ltd is likely to buy back 10.1 per cent stake in its subsidiary Nitesh Housing Development Pvt Ltd from HDFC Asset Management Co Ltd (HDFC AMC) for Rs 45 crore ($8.3 million), according to a company disclosure.

This will provide a part-exit to the investor who had put in a total of Rs 80 crore through a mix of compulsory convertible debentures (Rs 62 crore) besides equity stake purchase (Rs 18 crore) in 2009.

The firm amended the investment agreement where HDFC AMC converted the debentures into optionally convertible debentures with redemption due in September 2012, which was extended to June 2013. This was redeemable in multiple tranches and HDFC AMC has recently redeemed such debentures with face value of Rs 40 crore besides the interest. The rest of the debentures will be redeemed in the future.

As per the agreement, Nitesh Estates is also to buy back the shares with 26 per cent internal rate of return (IRR). This would tantamount to a buyback worth Rs 45 crore. The firm has now asked for shareholders’ approval for the buyback. 

Shares of Nitesh Estate closed at Rs 11.92 a unit, down 0.67 per cent on the BSE in a strong Mumbai market on Tuesday. The company has seen the market value shaved off by four-fifth since it went public three years ago. The parent company has a market cap of just Rs 173 crore.

It counted AMIF I, an entity of Och-Ziff Capital Management, as a large minority shareholder. AMIF exited the listed firm late last year after selling its shares in tranches.

Nitesh Estates, the real estate arm of the Nitesh Group, is an integrated property development company with presence across four asset classes. The firm develops residential properties, hotels, office buildings and shopping malls. Earlier, the company was reportedly looking to raise Rs 400 crore from PE firms for its residential projects.

(Edited by Sanghamitra Mandal)

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