Private equity major Citi Venture Capital International (CVCI) has exited its investment in Emaar MGF Land Ltd — a joint venture between Emaar Properties PJSC of Dubai and MGF Development Limited — by selling its shares back to the promoters.
According to media reports, Emaar MGF’s delay in floating the long-pending initial public offer could have triggered the exit. Emaar MGF put its IPO plans on hold twice (2008 and 2009) due to adverse market conditions.
CVCI made a complete exit from Emaar MGF last month following the close of the put option date (June 30, 2010). CVCI had acquired above 1 per cent stake at a price of Rs 1557.84 per share for $50.98 million (Rs 227 crore) in 2006.
According to a report published in VCCircle, CVCI received about $60 million for the stake sellout to Emaar MGF promoters.
Moneycontrol and Bloomberg had reported that Emaar MGF will cut its IPO to about Rs 2,000 crore ($430 million), half the size it announced earlier this year. Economic Times had reported that the company is preparing a prospectus with plans to sell 10 per cent for Rs 1,500 crore from the Rs 7,000 crore it aimed for in 2008. In 2008, Emaar MGF was forced it to abandon its $1.5-billion IPO.
Currently, the promoters (Shravan Gupta, MGF and Emaar Holding) of Emaar MGF hold 61.53 per cent stake, while promoter group other than promoters hold another 33.78 per cent stake. According to the draft red herring prospectus filed with SEBI dated on September 29, 2009, other investors including CVCI (1.28 per cent) was holding 4.69 per cent stake. CVCI was holding 11.7 million shares in Emaar MGF. In 2008, CVCI had sold a 40 per cent of its holding in Emaar MGF Land Ltd in a pre-IPO secondary deal. Hedge fund DE Shaw has bought 4.7 million shares from CVCI.
Emaar, which built the world’s tallest tower, the Burj Khalifa in Dubai, has developed approximately 89 million square feet of real estate across residential, commercial and other business segments and with operations in 14 countries, while MGF has delivered approximately 2 million square feet of retail space. The company, which commenced operations in India in February 2005, has its focus on development of residential projects in Delhi and elsewhere in the NCR, Mohali, Hyderabad, Chennai and other key Indian cities.
