RCom to demerge realty assets as Reliance Properties aims to monetise assets worth $2B

Reliance Communications, the telecom firm promoted by Anil Ambani’s Reliance ADA Group, has decided to demerge its real estate assets under a different entity Reliance Properties which will be listed separately.

All the shareholders of RCom, including the foreign institutional investors (FIIs), will receive shareholding in the real estate company on a pro-rata basis.

The proposed separation of real estate into a separate unit is part of RCom’s strategic plan to divest non-core assets, and focus on its core wireless and enterprise business.

The company has indicated that the monetisable value of the assets under its portfolio is close to Rs 12,000 crore which represents around Rs 60 per RCom share. The Reliance Communications management has indicated that the demerger will not impact RCom’s profitability as real estate is not being used for telecom’s business.

Reliance Properties will work with global partners to develop real estate, it said.

The properties proposed to be developed by Reliance Properties include prime land at Dhirubhai Ambani Knowledge City, Navi Mumbai measuring nearly 135 acres, with saleable area of over 15 million sq. ft as also a prime property near Connaught Place, New Delhi, measuring nearly 4 acres.

RCom scrip shot up 7.19 per cent to close the day at Rs 145.35 per share on the BSE in a weak Mumbai market on Monday. The stock hit a 52-week high of Rs 149.55 a share in intra-day trades.

But analysts whom VCCircle spoke to indicated that Rs 12,000 crore is a very ambitious number and that the firm might sell off some assets outright rather than developing them. Also it is not clear at present which kind of development it would undertake on the land parcel.

It is also not clear if any existing debt on its books will also get transferred to the books to Reliance Properties and how much is the land acquisition value for the assets that are included as part of the demerger.

Late last year, Reliance ADA Group had signed a multi-partnership deal with Chinese conglomerate Dalian Wanda Group, straddling the township projects and multiplex business in India and abroad.

Reliance ADAG had signed a MoU with the Chinese partner for development of realty assets owned by the two group companies. These would involve a JV to develop integrated township projects in India, including, but not limited to, commercial buildings and residential condos/apartments, hotels, retail space, etc.

This partnership included development of the land owned by RCom in Navi Mumbai. The group had said that time this asset has the potential for development of over 10 million sq. ft.

Dalian Wanda Group is one of the world’s largest real estate developers and with a recent acquisition in the US, it has also become the top multiplex operator globally.

The other project would be at the new business district project in Hyderabad, covering an area of 80 acres. It is owned by Reliance Infrastructure Ltd, having unlimited FSI for development for commercial and residential purposes, hotels, etc., with plans to develop up to 10 million sq. ft. area in a phased manner.

(Edited by Joby Puthuparampil Johnson)

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