Valor Estate Ltd approves demerger of Hospitality Business, merger of subsidiary

At its meeting held today, the Board of Valor Estate Limited (VEL) approved a Composite Scheme of Amalgamation and Arrangement amongst VEL, Shiva Realtors Suburban Private Limited (being renamed as Advent Hotels International Private Limited) (Advent), Esteem Properties Private Ltd. (Esteem), and their respective shareholders and creditors (Composite Scheme) in terms of which, Esteem (a WOS of VEL) shall merge with VEL and VEL will demerge its hospitality business into a separate legal entity - Advent, currently a wholly-owned subsidiary of VEL. VEL's existing shareholding in Advent will be canceled as an integral part of the Composite Scheme. Advent will subsequently be listed and have a mirror shareholding of VEL, subject to the receipt of necessary approvals.

Under the Composite Scheme, shareholders of VEL will receive 1 (one) share in Advent for every 10 (ten) shares held in VEL. The new entity will be listed on the BSE Limited and the National Stock Exchange of India Limited. The demerger will create two strong and independent entities with a more focused approach to serving their markets and customers.

VEL will continue to focus on the real estate business in the Mumbai Metropolitan Region (MMR) with its core competencies in land aggregation and joint development in partnership with strong developers. Advent will construct and operate the existing and new luxury and upscale hotels in Mumbai, Delhi, and Goa.

VEL's Board of Directors has approved a two-step process that will allow VEL's professional management to immediately use their decades of operational expertise and excellence while allowing VEL's management to focus primarily on the real estate business. Immediately, Advent (WOS of VEL) will obtain entire interests of VEL in an operating hotel, the 313-key Grand Hyatt (Goa), and also 50 percent joint venture equity interests (balance 50 percent with Prestige Estate Limited) in an under-construction project comprising the 590-key Marriott Marquis (Delhi) and the 189-key St Regis (Delhi), and will also later hold 75% equity in Hilton Mumbai, upcoming projects at Sahar near Mumbai airport, Worli, and Riverwalk at Bandra Kurla Complex. Over the next four to five years, Advent plans to implement three to four large upscale branded assets with about 4000 keys, in the hospitality micro-segments of Mumbai and Delhi.

The transaction is subject to customary regulatory approvals, including approvals from the respective shareholders and creditors, NCLT, stock exchanges, SEBI, and all other regulatory authorities as may be required. The Composite Scheme, including receipt of requisite approvals, and subsequent listing of Advent is expected to be completed in 2025.

Commenting on the demerger of hospitality business undertaking, Mr. Shahid Balwa, Vice Chairman and Managing Director of VEL, said: "VEL and Advent are charting a new course as separately listed companies. The real estate sector's inherent market dynamics and capital structure imperatives fundamentally differ from the hospitality sector. The demerger will allow each entity to implement its bespoke strategy, focus on its core business, and make capital allocation decisions. This strategic separation will allow the full value of each business to be realized for the benefit of our shareholders".

Shares of Valor Estate Limited was last trading in BSE at Rs. 191.05 as compared to the previous close of Rs. 177.35. The total number of shares traded during the day was 446963 in over 4590 trades.

The stock hit an intraday high of Rs. 196.40 and intraday low of 179.30. The net turnover during the day was Rs. 84549226.00.

Source : Equity Bulls

Keywords

DBRealty INE879I01012 ValorEstate Demerger HospitalityBusiness Merger Subsidiary