DB Realty, the tainted Mumbai-based real estate developer whose name figured in the 2G spectrum investigations, has lost its fourth director since February. The company though is putting up a brave face and calling it a routine exercise in restructuring the board. Sundaram V Rajagopal, a non-executive director, submitted his resignation on March 21, which was accepted by the company’s board on Monday, DB Realty informed the stock exchanges.
The stock price of DB Realty crashed over 13% on Monday to Rs.83.40 as the company announced the resignation. Rajagopal is currently the managing director of private equity firm Starwood Capital India Advisors Pvt Ltd for India and Southeast Asia. He joined the firm in July.
A DB Realty statement said Rajagopal was appointed as a nominee of Lehman Brothers pursuant to its investment prior to the initial public offering of the real estate company.
“The right to appoint nominee directors by all such investors ceased to exist on October 1, 2010. Post his joining Starwood Capital, his current schedule and commitments do not permit him to continue to be on company board and hence he has taken the decision to resign. DB Realty is in the process of consolidating and reconstituting the board to make it focused,” the company statement said.
Rajagopal was not available for comments but private equity industry sources, said that Starwood Capital would have directed Rajagopal to resign. On DB Realty’s future, industry experts feel being a highly owner driven company its promoters will now have to work very hard towards regaining credibility in the market.
DB Realty was earlier in talks with real estate PE funds to raise money for its government Bandra colony project. While the company management was believed to be in talks with Starwood Capital for a possible placement, industry sources said the deal was not approved by Starwood’s investment committee.
Thereafter, the realtor was understood to be talking to domestic investors to raise Rs.600-800 crore in the project. Industry sources, however, believe that Rajagopal’s resignation will only make it tough for the realtor to raise money.
