Steel magnate LN Mittal and a wholly-owned unit of US-based investment fund Farallon Capital have together acquired 13.33 per cent stake in a property development arm of Indiabulls Financial Services for Rs 447 crore. The deal values the arm, Indiabulls Infrastructure Development Ltd (IIDL), at Rs 3,350 crore, informed the company in a statement to the stock exchange.
IIDL will undertake big-ticket infrastructure projects like roads and ports, and will develop and invest in SEZs that will target Fortune 500 companies to set up manufacturing units in India by leveraging India's vast skilled workforce.
Mittal will hold 3.3 percent in the IIDL while Farallon will hold 10 percent. ''The confidence of these investors is a testament to the opportunity in front of the company, said Sameer Gehlaut, chairman & CEO of the Indiabulls Group.
Both Mittal and Farallon are existing investors in the parent company whose investments have shot up several times. While Mittal holds 2.5 percent stake in Indiabulls-he picked up shares at Rs 6-while Farallon holds little over 10 percent in Indiabulls. It invested in the IPO at Rs 19 per share.
This investment marks the group's next big move in construction-development and real estate and its first major investment in infrastructure area. The group will retain 86.7 per cent stake in the property development arm.
Mittal has been an investor in Indiabulls since the year 2000 when he bought 61.3 lakh shares, representing 7.52 per cent stake in the company, at an average price of Rs 6 per share. The investment has appreciated by more than 90 times in 6 years though his stake has gone down as the equity of the company kept expanding.
Six months back, Mittal invested again, this time buying 8.4 percent in Indiabulls Credit Services Ltd, an unlisted arm of Indiabulls that focuses on consumer loans, for Rs 90 crores. Farallon's initial investment in Indiabulls has multiplied by 25 times after buying shares for Rs 19 during its IPO.
IIDL will be part of the group of real estate subsidiaries and associates that will form Indiabulls Real Estate Limited, post the implementation of demerger that is likely to be completed this quarter. Indiabulls' shareholders will get one share of the financial services company and one share of the real estate company for every one share of Indiabulls they own.