Agastya07

BANGALORE -- Emaar Properties PJSC, Dubai's largest real-estate firm, has asked consultants and investment bankers to value its Indian joint venture Emaar MGF Land Ltd's assets.

The move may be in preparation for its exit, two people familiar with the development said.

Emaar Properties, the developer of Dubai's Burj Khalifa, the world's tallest tower, is reviewing and taking stock of its assets in India, and is in talks with investment bankers, said a third person directly involved with the negotiations.

"We are having discussions with them," said this person, adding that no final decision has been made yet.

The firm and its local partner said such valuation exercises were routine, and it was not a move to break up the assets. Emaar Properties has a 43.86% stake in New Delhi-based Emaar MGF, a joint venture formed in 2005 with the Guptas of MGF Developments Ltd, who own the remaining stake. Shravan Gupta is the executive vice-chairman and managing director of Emaar MGF.

"Emaar MGF, on a regular basis, values its assets for banking or allied purposes," the company said in an e-mail response.

"Emaar Properties, as an investor, also gets similar valuations done across its investments and business, in various geographic markets, including India. There is no move to split the asset portfolio of Emaar MGF."

But the company may be exploring sales options, too.

Separate mandates or assignments have been given to property consultants for sale prospects of various components. Emaar MGF's asset portfolio is estimated to be at least 50 billion rupees, property consultants said.

The Dubai company has appointed Standard Chartered Bank in India to put value its holdings, and oversee the entire process, which may take three-six months to conclude, the two people familiar with the development said. A Standard Chartered Bank spokeswoman declined to comment.

"Once the valuation is done, they (Emaar Properties) will discuss and identify potential buyers with their investment banking team," said one of the persons familiar with the development, adding that the Dubai company is looking to eventually exit from India. "Options include selling to the joint venture partner, who has the first right of refusal, or selling to a third person."

Emaar MGF has 11,340 acres of land and 44 (residential, commercial and hospitality) projects in over 20 cities. Emaar Properties has total assets of $17 billion, of which international assets are valued at $6.12 billion.

In 2010, Emaar Properties posted a net operating profit of $826 million, 31% higher than the corresponding figure of $633 million in 2009, according to a company statement. Its retail and hospitality subsidiaries contributed significantly to the revenue.

In India, however, Emaar has put its multi-crore hospitality and retail plans on the back-burner, focusing more on residential projects.

Emaar MGF has been exiting some of its hospitality projects and partnerships. Recently, the developer sold a seven-acre property in Kolkata, where it had planned to develop a Marriott hotel, for 2.50 billion rupees to a consortium of developers, including Kolkata-based Mani Group and Bangalore-based Sattva Group.

The latter is now pursuing the hospitality project, said a person involved in the process.

Bijay Agarwal, Sattva Group Chairman and Managing Director, confirmed the deal, but didn't comment on the price.

"As part of its financial and business strategy, the company raises funds from various sources, including monetizing assets held for a longer term," Emaar MGF said in a statement. "The Kolkata hospitality project was part of such an initiative. The company continues to look at such opportunities from time to time."

Last year, the U.K. budget hotel chain Whitbread Plc bought the 50.1% stake held by Emaar MGF in their joint venture. Whitbread is now developing hotels under the Premier Innbrand in India on its own.

Emaar MGF is also in talks with a few private equity funds to raise money for projects through a special purpose vehicle. The move comes after three aborted attempts by the firm to raise money from the equity market.

It filed a draft red herring prospectus for the fourth time on Oct. 4, slashing the amount it wanted to raise to 16 billion rupees from a 70 billion rupees target in 2008. The money will be used to repay loans, pay development charges and redeem preference shares. The developer's debt, as of Feb. 28, stood at 46.74 billion rupees.

"Emaar MGF has refiled its [prospectus] with the (Securities and Exchange Board of India), and we are awaiting clearances from the regulator," the firm said.

While the real estate market has stabilized and prices are no longer rising, the capital markets remain a good option.

"The question is when and how," said Ajit Krishnan, leader of the real-estate practice at Ernst & Young. "The credentials of the developer and its execution record would determine" the share sale's success, he added.

Emaar MGF was criticized for the construction of the 2010 Commonwealth Games village in Delhi, and received a bail-out package of 7 billion rupees from the Delhi Development Authority.

MANOJa

Real estate developer Emaar MGF said it conducts valuation exercise of its assets on a regular basis and rebuffed reports of a possible split between its partners — MGF Development and Dubai’s Emaar Properties. “Emaar MGF, on a regular basis, values its assets for banking or allied purposes. Emaar Properties, as an investor, also gets similar valuations done across its investments and businesses, in various geographic markets including India,” Emaar MGF Land executive president Sanjiv Saddy said.

Despite repeated reports of strained relations between the domestic and the overseas partners in the last few years, he denied that the two firms are moving towards a split. “There is no move to split the asset portfolio of Emaar MGF, and any reports to the contrary are baseless rumours,” Saddy said. When contacted, a spokesperson of Emaar Properties accepted that valuations are being done as a regular practice, but denied that it is planning to exit the joint venture. “And as a company policy, we do not respond to such market rumours or speculation,” the official added.

The spokesperson said India is one of the key markets for Emaar Properties and it is committed to the joint venture operations with MGF Developments in the country. “Emaar Properties and MGF Development have established a strong relationship through the six years of its JV. This relationship intends to create incremental value for its stakeholders,” the official asserted. Emaar MGF, a joint venture between Emaar Properties and domestic firm MGF, commenced its operations in the country in 2005. MGF has 50 per cent stake in the JV, while Emaar has about 45 per cent holding. Rest lie with foreign institutional investors and others.
Last year, Emaar group chief Md A Alabbar had said in a tongue-in-cheek comment that the only way left for him was to publicly “kiss” his Indian partner to show the closeness.

After aborting two attempts to raise money from capital market, Emaar MGF has filed the draft red herring prospectus for the third time in September 2010 with a plan to mop up about Rs 1,600 crore, much lower than the original plan of Rs 7,000 crore in the first try.

“Emaar MGF has re-filed its DRHP with the Sebi, and we are awaiting clearances from the Regulator,” Emaar said. As on February 28, 2011, the total debt of the company stands at Rs 4,674 crore.

MANOJa

Emaar group chief needs to kiss some forum members too, to prove a point .

Varun84

Now SEBI has not given nod to Emaar MGF for IPO. Will there be any impact on New lauched and on going projects ?

MANOJa

Dubai's Emaar riding to rescue of Indian JV Emaar MGF - CNBC-TV18 -

Varun84

Looks like all the black money from CWG and Boulder hills are coming to India.

MANOJa

LOL. R u the courier for transporting all the black money ? How do u know all this ?

Varun84

Oh yes you are right Now I remember that you are working as a courier/office boy in emaar MGF. Look some where else I am not interested to hire you as a office boy.

MANOJa

I do not answer to useless comments . Anyways, u have not answered, as to how u know that Emaar is getting black money in ? Any source of information or r u day dreaming ?

Varun84

Any way you are the one who has started the useless comments.