Deutsche Bank pays $1 bn for 5% in Emaar-MGF

Firm is gearing up to float an IPO and has now raised its targetted mop-up to Rs 25K cr.

New Delhi-based real estate company Emaar-MGF, which is gearing up to float an initial public offering, has sold under 5 per cent of its equity for $1 billion (Rs 4,500 crore) to Deutsche Bank, which has the right to buy more.

With the Deutsche money in its kitty, Emaar-MGF is raising the estimated mop-up from its IPO from Rs 13,000 crore to Rs 25,000 crore, said a top executive of the company. As per the earlier plan, the IPO was to dilute 10 per cent of its post-issue capital. This has trebled to 30 per cent in the new plan.

So far, the IPO of another Delhi-based company DLF, which has been waiting for Securities & Exchange Board of India’s approval, was billed as the largest in India’s capital market history. It was intended to raise about Rs 13,000 crore. The biggest IPO to have hit the market so far was that of Reliance Petroleum, which raised Rs 8,000 crore last year.

When contacted, the Emaar-MGF spokesperson declined to comment.

Last year, the company had brought in Rs 4,500 crore as foreign direct investment. It already has an investment kitty of about Rs 18,000 crore.

The company has also put in place a new organisational structure under which the group’s head of strategy, Dinesh Jain, will head the special economic zones initiative. The retail business will be overseen jointly by Susil Dungarwal, group vice-chairman, and Shravan Gupta, the managing director.

Gupta will look after the north Indian side of the business, with Dungarwal taking care of west and south. The township business will be headed by Gupta’s younger brother Siddharth, while Sanjay Malhotra will head the commercial realty business.

The hotels and leisure businesses will be headed by Sanjay Rai. The company is looking for someone to head its retail business in the east as well as two other persons to take charge of its education and hospital businesses.

The company is still in the process of acquiring land around metros, while it has bought land in around 30 second and third tier towns and cities. It has acquired 12,000 acres of land, which could be valued at Rs 36,000 crore.

It is working on a strategy on building a large land bank over the next 18 -24 months and developing it in a phased manner as satellite townships in and around tier 2 and tier 3 cities to accommodate its planned business streams, SEZs, hospitals, education, retail (both malls and retail), hospitality and leisure, townships and commercial real estate. Each of these businesses will operate as a separate profit centre, to be headed by a senior executive.