Indiabulls prepares to delist Dev Property

Indiabulls Real Estate will buy Dev Property Development Fund for about $274 million in an all-share deal, offering investors an exit at the same price at which they bought their shares 12 months ago.
Indiabulls is preparing to delist Dev Property Development Fund from LondonÆs junior stock exchange, the Alternative Investment Market (AIM), just over a year after it listed the fund there. The total outlay for the transaction is ú138 million ($274 million).

Dev Property shareholders will receive 0.12091 new Indiabulls global depositary receipts for each Dev Property share held. At Indiabulls' closing share price of Rs654.40 ($16.49) on February 27, this translates to a value of each Dev share of ú1. The shares were offered in 2007 at ú1 each thus shareholders are being offered an exit at the same price that they bought in. Investors are, however, net negative by the carrying cost for the period they held the shares.

Dev's investors include Farallon Capital, Fidelity, Government of Singapore Investment Corporation and Citi.

Dev shares closed on Wednesday at 75.50 pence, placing an equity value on the firm of around ú120 million pounds.

In January 2007 Dev Property was the fourth Indian property developer to launch an AIM listing of a fund which allowed investors to participate in defined development projects. Dev followed a $340 million fund-raising by K Raheja sponsored, Ishaan Real Estate, Hiranandani-backed Hirco and Unitech-promoted, Unitech Corporate Parks.

Dev sought to raise ú316 million during its roadshow. The funds were to be deployed for commercial and residential developments in major Indian cities and in special economic zones (SEZ) in which India allows foreign direct investment.

But both Hirco and Unitech were trading below offer price when Dev launched its offering with the result that investor interest in another Indian property fund was lukewarm at best. On January 31, 2007, Dev was forced to downsize its offering by half to ú138 million. Dev pruned its ownership in the projects accordingly.

Indiabulls Real Estate was set up in 2005 as part of Indiabulls Financial Services and demonstrated an ability to win competitive bid situations for properties in both Mumbai and New Delhi. It was the first Indian developer to bring foreign direct investment into the Indian real estate sector after the rules were changed in March 2005 by setting up a joint venture with US investment firm Farallon Capital Management.
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