Indiabulls Real Estate Ltd and Embassy Group Scheme of Amalgamation

Does anyone have an update on when exactly the Embassy merger will go through ? Seems to be taking very long by most standards. A very long term board member of IBREL exited yesterday. Wonder if this is a signal that the merger is very close (given that Embassy would want to reconstitute the board) : https://www.bseindia.com/xml-data/corpfiling/AttachLive/2a5341da-7412-4439-a91a-2eeb593b5fe5.pdf

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The next hearing in NCLT is on 27.05.2022. NCLT approval is probably the last step in Merger process. Let’s await for the approval.

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My question is.
Do new developments by embassy group automatically comes under REITs. Please guide.

With benefit of hindsight, can we say the story was circulated and hyped so that the promoter could easily exit his stake. Many other respected people are also saying the same, that the special situation was not special but pumped to retailers to buy the narrative

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One should buy and sell stocks after doing their own research. If someone has bought the stock following someone else, that’s their mistake.

I do not see any pump and dump here. The whole market itself is falling and smallcaps are worst hit. If the merger goes through, it will create a real estate mamooth. Do our own research.

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Everything is falling but the fall here has been brutal. Even on good days this stock bucks the trend. Such weak price action is never a good sign.
You are right when you say that people should do their own research because If they did they would learn that not all is hunky dory at embassy group.
Can’t say too much on a public forum but those interested should definitely talk to someone in real estate. Information isn’t that hard to come by.

Edit: I have read too many Twitter gurus praising embassy promoters and their excellent governance standards. Again a case of inadequate research about their history

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if we are looking for 100% trustworthy promoters without any political inclination , not a single bad decision in lifetime , minority shareholder friendly then only a handful of companies will be there to invest. In case of indiabulls , not only Embassy but blackstone is also a major investor which is a leader in real estate investing. Story changes with price action. Merger Story was intact and everyone was chasing it till market was fully aware of the debt in books for both entities in their presentation on January, Q3 result of indiabulls was below average which was really surprising from there on selling begins. When they announced QIP, price was around 150 and by the time QIP starts stake was sold around 101 , which was another drawdown. Raid at indiabulls housing is another reason even though merged entity has nothing to do with it. Going by the Q3 result, Q4 result will also be in same line as they dont have much sales.

Final NCLT hearing is scheduled on may 27 and hopefully it will get the final approval. In that case in another 2-3 months merger can complete and name change will happen . Again headwinds like high inflation of materials ,high home loan interest rates etc still persists and rerating starts only when embassy utilize the land bank and develop. It’s going to be a long story and extreme volatility will test our patientence

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As far as i am concerned there is Nothing wrong with 50% trustworthy promoters as long as one knows what one is getting in to but please remember that Investors pay a premium for companies backed by Promoters with a good record of C.G. Generally speaking Temporary blips in quarterly performance are seen as temporary and big dips in prices are bought into. All this needs to be baked into one’s investment thesis and valuation model. Also it helps with the sell decision
Debt is not a problem as long as you have cash flows. And that’s whats ailing embassy group. Please remember that embassy is predominantly a commercial real estate developer and that part of their portfolio isn’t doing so well

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For what it’s worth there are issues with their residential portfolio as well. Their projects in Bangalore have been inordinately delayed and this must have hurt their brand too. I would always pay more for corporate governance, personally speaking.

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Hey, could you please elaborate on that last part about their commercial portfolio not doing well?

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The NCLT, Chandigarh Bench ordered that the notice of hearing be advertised in “Financial Express" (English) and “Jansatta” (Hindi), both in Delhi NCR Edition; not less than 10 days before 29.07.2022. In addition to the above public notice, the Petitioner Company was directed to serve the notice of the petition on (a) Central Government through Regional Director (Northern Region), Ministry of Corporate Affairs; New Delhi (b) the Official Liquidator attached to Punjab and Haryana High Court; (c) Registrar of Companies, NCT of Delhi and Haryana (d) Bombay Stock Exchange (e) National Stock Exchange (f) Securities Exchange Board of India (SEBI) (g) Income Tax Authority (through Nodal Officer) Principal Chief Commissioner of Income Tax, NWR, Aaykar Bhawan, Sector 17-E, Chandigarh. Objections, if any, to the ‘Scheme’ contemplated by the authorities to whom notice has been given may be filed on or before the date of hearing fixed herein, failing which it will be considered that there is no objection to the approval of the ‘Scheme’ on the part of the authorities and the Tribunal will proceed in the matter.

The next date of hearing of the petition shall be on 29.07.2022 for the consideration of the approval of the scheme as contemplated between the petitioner companies.

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FYI: The NCLT, Bengaluru Bench has already granted approval for the merger of NAM Estates, Embassy and Indiabulls Real Estate vide its order dated 22.04.2022. Therefore, only a formal process before the NCLT Chandigarh Bench is pending for approval. Hopefully the reverse merger process would be complete in the next 3 months.

NCLT Bengaluru Order.pdf (4.1 MB)

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What do you mean by "formal process’? Since the registered office of companies involved here are located at different states, the regional bench of NCLT at the relevant states need to approve the scheme separately. Note that the NCLT bench at Bengaluru having already approved the scheme has no bearing and NCLT, Chandigarh bench needs to asses it independently before approving it.

Of course the NCLT Chandigarh bench would assess it separately based on the objections received after paper publication. By ‘formal process’ I don’t mean to say that its an empty formality. But 9 out of 10 times it usually goes though is my opinion.