The board of Unitech Ltd, India’s second largest real estate developer by market capitalisation, cleared a 1:1 swap ratio for the demerger of its subsidiary Unitech Infra.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The mothership will now focus only on its core business of building and selling properties.

The total valuation of these assets would be around Rs 16 per share, said Saurabh Kumar and Gunjan Prithyani of JP Morgan.

“However, given holding company nature and limited income generation potential from the assets, the new company is likely to trade at a substantial (30%) discount to asset value and thus likely limit near-term value accretion to investors holding the Unitech stub,” Kumar and Prithyani said in a note to clients.

The promoters will now hold 35% or about 1,408 million equity shares of Unitech Infra, while the rest will be held by the public.

Unitech Infra would cease to be a wholly owned subsidiary of Unitech.

The spinoff includes the business of amusement parks and hotels, construction business; and investments in the infrastructure sector, which includes investments in telecommunications, transmission towers, hotels, amusement parks, special economic zones, IT parks, logistics parks, industrial parks, property management operations and township management operations, including all assets and liabilities.

The de-merged businesses would be transferred to Unitech Infra, and existing shareholders of Unitech would now get equivalent number of shares in Unitech Infra.

The developer’s board has also asked the restructuring committee to evaluate and consider proposals for further reorganisation of the company or its assets in any manner to create value.

It has also constituted a committee to evaluate any potential acquisition, but did not provide any further details.

Unitech Infra would now comprise 40% stake in Unitech Corporate Park (UCP), 50% stake in Unitech Amusement Park, 32.5% holding in Uninor Wireless and the in-house construction and power transmission divisions.

UCP has six properties including five SEZs and one IT  park, with a total development potential of 21.4 million  sq ft in which the assets are valued at about Rs 3,500 crore.

It had appointed Ernst & Young, S R Batliboi & Co and Amarchand & Mangaldas and Suresh A Shroff & Co as advisors to assist the proposed corporate restructuring.