Indiabulls Real Estate shares soared over 42% today, rising to highest in more than six years on the news of restructuring its operations into separate business arms. The company’s shares ended up a whopping 40% at Rs 148.15 on BSE, before rising to a 75-month high of Rs 150.9.
Earlier this morning, Indiabulls Real Estate said that its Board of Directors has considered the possibility of restructuring its existing ‘residential’, ‘commercial’ and ‘leasing’ businesses into separate businesses to bring in greater focus.
The company, in a press release, said, “The Board of Directors of the company among other things considered the possibility of streamlining the existing residential, commercial and leasing businesses of the company by segregating the commercial and leasing business segment carried on by itself and/or through its SPVs and vesting the same into ‘Indiabulls Commercial Assets Limited’ and restructuring/reorganising the businesses of the company”.
Indiabulls Real Estate further added that its board has constituted a restructuring committee, comprising some of its directors and officers to consider, examine and evaluate the feasibility of and options to implement the aforementioned restructuring or reorganisation of the business of the company.
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Adding to the development, Abhishek Lodhiya (Sr. Equity Research Analyst – Infrastructure, Capital goods and Real Estate) of Angel Broking said, “Indiabulls Real Estate has announced plans to hive off its commercial real estate business into a separate venture, Indiabulls Commercial Assets Ltd (ICAL). The residential business will continue to operate under Indiabulls Real Estate. The eventual plan is to create a separate entity for the commercial and leasing business and the target listing the stock at a later date. Indiabulls will also be looking at getting a foreign investor/PE Fund to participate in the equity of ICAL.
In the recent past, there have been some marquee deals in this space. Government Investment Corporation (GIC) of Singapore recently took a stake in the commercial real estate business of DLF while Blackstone had bought into K Raheja Corp. Most large global investors have preferred to participate in the commercial/leasing market in India as the retail commercial/leasing through a very sluggish phase with tepid demand. Markets are expecting value discovery for Indiabulls Real Estate through this move as was evident from the stock rallying over 30% during the day.”