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The three promoters of Indiabulls, the real estate to power group set up 14 years ago by two Indian Institute of Technology (IIT) graduates and their common friend, have split.
Sameer Gehlaut, the chairman of the Rs 20,600-crore group, will control and manage the group’s flagship companies like Indiabulls Housing Finance, Indiabulls Real Estate, Indiabulls Securities and Indiabulls Wholesale Services. Other promoters, Rajiv Rattan and Saurabh Mittal will control Indiabulls Power Ltd (IPL) and Indiabulls Infrastructure and Power Ltd (IIPL) and will not be able to use the Indiabulls brand name after December 31 this year.
In a filing with BSE, the trio said Gehlaut had resigned as the chairman and director of IPL and IIPL. Rattan and Mittal had resigned from their directorship from Indiabulls Real Estate and Indiabulls Housing Finance and relinquished their control and management power with all other companies to be controlled by Gehlaut.
In the group’s total market capitalisation of Rs 20,600 crore, Indiabulls Housing Finance, Indiabulls Real Estate and Indiabulls Power account for Rs 11,902 crore, Rs 3,541 crore and Rs 3,470 crore, respectively.
“This amicable reorganisation exercise will enable all three young entrepreneurs to focus on their areas of expertise, consolidate their shareholding of the companies they want to run on a long-term basis and continue to maximise shareholder value,” a note from Indiabulls said.
The note said the group was aiming to ringfence Indiabulls Housing Finance Ltd (IBHFL) from power business and further institutionalise the company after it inducted K C Chakrabarty, former deputy governor of the Reserve Bank of India, and R M Malla, former chairman of IDBI Bank.
“The board of Indiabulls Housing Finance wants to delink ownership from management and has decided to elevate the current CEO, Gagan Banga, as the vice-chairman and managing director of the company,” the note from the company said.
The reorganisation would also enable the group to continue with its efforts to ringfence IBHFL from contagion risks of any other business, besides bringing in specialised focus towards the real estate business and power business, it added.
According to a group insider, since Indiabulls Housing Finance contributes 80 per cent to the group’s profits and is retail brand, it was imperative to “ringfence” the brand from Indiabulls Power, an industrial company.
According to an agreement between the promoters, Gehlaut will sell Rs 800 crore worth of shares in Indiabulls Power to Rattan and Mittal, while the latter two will buy those by selling shares worth the same amount in Indiabulls Housing and Indiabulls Real Estate to Gehlaut.
Analysts said the move would be looked at positively by the markets. “It indicates they want to bring in sharper focus on each of the businesses,” said the head of research at a Mumbai-based brokerage who did not want to be named.
Indiabulls, which once forayed into many segments and wanted to be among the top two or three players in whatever business they entered into, has narrowed its focus in the past couple of years to just four things — financial services, stock broking, real estate and power.
Though the group has grown at a compound annual growth rate of 54 per cent in the past five years, it has exited unsecured lendings (once its mainstay), given up its insurance licence, exited its retail venture, whittled down its exposure in a commodity exchange where trading does not happen now.
The group had a total debt of Rs 42,189 crore as on March 31, 2014.
Except Store One Retail, all Indiabulls group company stocks fell on BSE on Wednesday. The Indiabulls Wholesale Services stock declined the most (7.78 per cent), while IPL slipped 4.99 per cent. IIPL was down 4.95 per cent, Indiabulls Real Estate stock 2.23 per cent, Indiabulls Securities down 1.55 per cent and Indiabulls Housing Finance down 0.18 per cent. The Store One Retail scrip gained 9.9 per cent.
WHO THEY ARE & WHAT THEY GET
Sameer Gehlaut (40)
- A 1995 batch IIT Delhi graduate and a founder of the Indiabulls group
- Will look after the group’s key businesses like housing finance, real estate, wholesale trading business
- Will retain control over the Indiabulls brand name
- An IIT Delhi graduate (1994) and a co-founder of the group
- Owns a 5.6% stake in Indiabulls Housing Finance (market value of Rs 11,900 cr)
- Will look after Indiabulls’ power and infrastructure businesses [The company is setting up two power projects in Amravati and Nashik in Maharashtra]
- An alumnus of IIT Delhi (1995) and Harvard Business School
- Owns a 5.6% stake in Indiabulls Housing Finance (market value of Rs 11,900 cr)
- Will join Rattan in looking after the power and infra businesses
- He and Rattan have time till year-end to remove all references to the Indiabulls brand name from power and infra businesses
