Real estate firm Godrej Properties has decided to cancel its plans to invest Rs 700 crore in DB Realty to acquire a 10 per cent stake and set up a joint platform amid concerns raised by minority shareholders and other stakeholders.
On Thursday, Godrej Properties had announced that it would invest Rs 400 crore to acquire around a 10 per cent stake in DB Realty and another Rs 300 crore to set up a joint platform for undertaking slum redevelopment project.
When asked whether the investment deal with DB Realty has been cancelled, Godrej Properties Ltd Executive Chairman Pirojsha Godrej replied in affirmative.
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"We've decided against going ahead post the feedback we received from various stakeholders including our minority investors," Pirojsha told PTI.
"There were concerns with the structure of the investment as well as with the slum redevelopment business in general," he added.
As per the proposed deal, the total size of the joint platform between Godrej Properties and DB Realty was Rs 600 crore, with each party contributing Rs 300 crore. Mumbai-based Godrej Properties Ltd (GPL), one of the leading developers in the country, had proposed to invest a total of Rs 700 crore.
In a regulatory filing on Friday, GPL said that the company received substantial feedback and views from its stakeholders and minority investors raising concerns on the proposed transaction with DB Realty.
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The concerns were with respect to the structure of the deal, the rationale for the investment in DB Realty Ltd and the merits of investing through the platform.
To consider and discuss the feedback and the concerns raised by stakeholders, the Board met on Friday and deliberated on the same.
"After prolonged discussions and taking into consideration the feedback from the stakeholders and minority investors, the board has decided not to proceed with any further evaluation of a potential investment in the equity capital of the DB Realty and the platform," the filing said.
The board has authorised the company to engage with DB Realty with regard to the same, including ensuring appropriate and timely dissemination of this information by DB Realty Limited to its shareholders.
"The company may however continue to explore the possibility of evaluating projects with DB Realty on a case to case basis," the filing said.
On Thursday, the company announced a proposal to subscribe to warrants issued by DB Realty.
On Thursday, Pirojsha had said, "We will be investing about Rs 400 crore in DB Realty for around 10 per cent stake through the issue of warrants."
Through this deal with DB Realty, Godrej Properties had a plan to enter into a slum redevelopment business.
The board had on Thursday 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 with DB Realty to undertake slum rehabilitation and the Maharashtra Housing & Area Development Authority (MHADA) redevelopment projects.
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Godrej Properties has a major presence in the Mumbai region, Pune, Bengaluru and Delhi-NCR.
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