Emaar Properties PJSC, Dubai’s largest real-estate firm, has asked consultants and investment bankers to value its Indian joint venture Emaar MGF Land Ltd’s assets. The move is seen in the industry as preparation for its exit. Emaar Properties, the developer of Dubai’s Burj Khalifa, the world’s tallest tower, is reviewing and taking stock of its assets in India, and is in talks with investment bankers.
Though no final decision has been made yet the firm and its local partner maintain such valuation exercises were routine, and it was not a move to break up the assets. Emaar Properties has a 43.86% stake in New Delhi-based Emaar MGF, a joint venture formed in 2005 with the Guptas of MGF Developments Ltd, who own the remaining stake. Shravan Gupta is the executive vice-chairman and managing director of Emaar MGF.
The Dubai company has appointed Standard Chartered Bank in India to put value its holdings, and oversee the entire process, which may take three-six months to conclude.Emaar MGF has 11,340 acres of land and 44 (residential, commercial and hospitality) projects in over 20 cities. Emaar Properties has total assets of $17 billion, of which international assets are valued at $6.12 billion.
In 2010, Emaar Properties posted a net operating profit of $826 million, 31% higher than the corresponding figure of $633 million in 2009, according to a company statement. Its retail and hospitality subsidiaries contributed significantly to the revenue.
In India, however, Emaar has put its multi-crore hospitality and retail plans on the back-burner, focusing more on residential projects. Emaar MGF has been exiting some of its hospitality projects and partnerships. Recently, the developer sold a seven-acre property in Kolkata, where it had planned to develop a Marriott hotel, for Rs.2.50 billion to a consortium of developers, including Kolkata-based Mani Group and Bangalore-based Sattva Group.
Last year, the U.K. budget hotel chain Whitbread Plc bought the 50.1% stake held by Emaar MGF in their joint venture. Whitbread is now developing hotels under the Premier Innbrand in India on its own. Emaar MGF is also in talks with a few private equity funds to raise money for projects through a special purpose vehicle. The move comes after three aborted attempts by the firm to raise money from the equity market. It filed a draft red herring prospectus for the fourth time on Oct. 4, slashing the amount it wanted to raise to 16 billion rupees from a 70 billion rupees target in 2008. The money will be used to repay loans, pay development charges and redeem preference shares. The developer’s debt, as of Feb 28, stood at Rs.46.74 billion.
