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L N Mittal, CEO of the world's largest steel company Arcelor-Mittal, and a wholly owned unit of San Francisco-based Farallon Capital, the world's largest investment fund, have together acquired a 13.33 per cent stake in Indiabulls Infrastructure Development Limited, the majority owned subsidiary of Indiabulls Financial Services Limited, for Rs 447 crore (Rs 4.47 billion).
The deal values Indiabulls Infrastructure Development Limited at Rs 3,350 crore (Rs 33.50 billion). Post the new investments, the shareholding of Indiabulls Financial Services in Indiabulls Infrastructure Development Limited will go to 86.7 per cent.
This investment marks the next step in undertakings by Indiabulls Financial Services in the construction-development and real estate related segments, and marks the company's first major investment in the infrastructure area. Indiabulls Infrastructure Development Limited would be undertaking large-scale infrastructure projects and development of Special Economic Zones to cater to Fortune 500 companies that are interested in setting up manufacturing units in India to leverage advantages of vast skilled workforce of India.
L N Mittal has been an investor in Indiabulls Financial Services, the listed company since the year 2000 when he had originally bought 6.13 million shares representing about 7.52 per cent stake in the company at an average price of Rs 6 per share. Mittal's original investment in Indiabulls Financial Services has appreciated by more than 90 times in 6 years, and he continues to be a large shareholder in the company.
About six months ago, Mittal invested about Rs 90 crore (Rs 900 million) to buy 8.4 per cent stake in Indiabulls Credit Services Ltd, a unlisted subsidiary of Indiabulls Financial Services that focuses on consumer loans.
Farallon Capital has been an investor in Indiabulls Financial Services since the IPO of the company in year 2004, when it invested at Rs 19 per share and has seen its initial investment multiply over 25 times. The firm continues to be one of the largest shareholders of the company.
Indiabulls Infrastructure Development Limited is focused on infrastructure development in India and plans to build world class facilities and infrastructure to promote the business activities for SEZs.
IIDL will be part of the group of real estate subsidiaries and associates that will form Indiabulls Real Estate Limited subsequent to the implementation of the scheme of demerger.
The demerger is expected to be completed during the current fiscal quarter, and will result in the company's equity shareholders owning one equity share of Indiabulls Financial Services Limited, comprising the financial services business, and one equity share of Indiabulls Real Estate Limited, comprising of the real estate and construction-development related business, for each share of the Company they currently own.
"India is a rapidly growing economy and provides a unique opportunity to create world-class infrastructure and development. Indiabulls group is well positioned in construction-development and infrastructure market to leverage Indiabulls strong pan-India presence, strong execution skills, proprietary deal pipeline, and strong track record. The confidence of L N Mittal and Farallon Capital in Indiabulls Infrastructure Development Limited is a testament to the huge opportunity in front of the company," said Sameer Gehlaut, chairman & CEO of Indiabulls Group, in a media release.