 "Godrej Properties to invest Rs 400 cr in DB Realty to pick up 10% stake")
Real estate firm Godrej Properties will invest Rs 400 crore to acquire around 10 per cent stake in DB Realty and another Rs 300 crore to set up a joint platform for undertaking slum redevelopment projects.
The total size of the joint platform of Godrej Properties and DB Realty will be Rs 600 crore, with each party contributing Rs 300 crore.
Mumbai-based Godrej Properties Ltd (GPL), one of the leading developers in the country, will invest a total of Rs 700 crore.
In an interview with PTI, GPL Chairman Pirojsha Godrej said the company's board has approved investments in DB Realty.
"We will be investing about Rs 400 crore in DB Realty for around 10 per cent stake through issue of warrants," Pirojsha said.
Godrej Properties will subscribe to warrants convertible into equity shares.
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Stating that DB Realty has a strong capability of executing slum redevelopment projects, he said the company would enter this new segment that has huge opportunities.
"We will have a strategic partnership with DB Realty and will jointly set up a platform of Rs 600 crore," said Pirojsha.
Godrej Properties and DB Realty will invest Rs 300 crore each in this joint platform for redevelopment projects, Pirojsha said.
Pirojsha said GPL's total investment would be around Rs 700 crore. The first tranche of the investment will be made in the current quarter.
According to a regulatory filing, GPL's board granted its approval to evaluate a potential investment in DB Realty Ltd in the form of warrants convertible into equity shares and the setting up of a special purpose vehicle as a joint venture to undertake slum rehabilitation and MHADA redevelopment projects.
In a statement, Godrej Properties said the equity platform will act as a strategic special purpose vehicle providing the company with right of first refusal for all slum rehabilitation and MHADA (Maharashtra Housing and Area Development Authority) redevelopment projects to be identified by DB Realty across Mumbai.
This will be under a 50:50 equity partnership with 10 per cent development management fees to GPL.
This will provide GPL access to a large number of slum rehabilitation and MHADA redevelopment projects in the Mumbai Metropolitan Region.
Mohit Malhotra, MD and CEO, Godrej Properties, said, "We are pleased to announce a strategic partnership with DB Realty, which will give GPL a strong platform for growth in Mumbai."
Malhotra added that this strategic partnership will allow each company to utilise its complementary strengths to boost the amount of successful slum rehabilitation and MHADA redevelopment projects in the city.
In a separate filing, DB Realty said it will issue 5 crore warrants to GPL.
DB Realty stock closed at Rs 96.10 apiece on the BSE, up 4.97 per cent. GPL finished at Rs 1,669.25, down 6.41 per cent.
Godrej Properties has a major presence in Mumbai region, Pune, Bengaluru and Delhi-NCR.