Mumbai: Brookfield Asset Management Inc., a Canadian asset management company that manages investments worth $181 billion, is set to acquire all of Unitech Corporate Parks Plc (UCP), a London Stock Exchange-listed, India-focused real estate investment firm, paying `3,000 crore.

A definitive agreement to this end is likely to be signed this week in London, said four persons directly involved in the deal. None of them wanted to be named.

“We do not comment on market speculation,” said Brookfield Asset Management in an email response. Routhu Nagaraju, executive vice-President at Unitech Ltd, said, “UCP has announced that it will sell six projects and the process has not seen anything adverse. It should go through at some point in time.”
UCP, which is incorporated in the Isle of Man, is developing six special economic zones (SEZs) and information technology (IT) parks in India. It had formed a 60:40 joint venture with Unitech,
India’s second largest realty company by market capitalization, to develop these assets.

Last year, UCP was in talks to sell its Gurgaon IT SEZ but the deal did not materialize. In April, Unitech had informed the stock exchanges that UCP was in talks with an investor for selling Candor Investments Ltd, the holding company, for its 60% interest in the six real estate projects.

The market capitalization of UCP was `2,750 crore as on 9 June and Brookfield Asset is offering a 9% premium. RBS AA Holdings (UK) Ltd owns a majority share in UCP at 20.08% followed by Brookfield with a 16.65% stake in the company.

Property consultants Jones Lang LaSalle (JLL) India has been advising UCP on the transaction. The firm declined to offer any comment on the deal.
With this transaction, Unitech will take home is `1,200 crore. But people familiar with the situation indicate that Unitech needs to pay infrastructure company IDFC Ltd from the proceeds after the latter converted its debt into equity a few months back.

Two persons directly involved in the transaction, who did not want to be identified, said, “Yes, it is true that IDFC has an equity stake in the 40% that Unitech owns in UCP. The stake was given to offset the debt of IDFC in Unitech.”

A text message to an IDFC spokesperson went unanswered. Nagaraju of Unitech declined to comment on the IDFC deal.

UCP had raised about £360 million by issuing and placing its ordinary shares on the Alternative Investment Market (AIM) of the London Stock Exchange on 20 December 2006.

Two analysts tracking the company, who did not want to be identified, said the transaction will not reduce Unitech’s debt materially.

The Economic Times, on 4 April, reported that Brookfield was looking to acquire 100% of UCP.

This is the first transaction for Brookfield since it started to officially manage AIG Global Real Estate India’s portfolio from January.

UCP’s total portfolio is to build 21 million sq. ft of commercial assets, of which it has developed close to 6 million sq. feet. It was earlier looking to sell the asset located in Gurgaon, but the sale of the asset was stalled due to a “third-party” problem.

According to the AIM admission document filed by UCP during its listing, the group, through Unitech Developers and Projects Ltd (UDPL), is developing the project pursuant to a joint development agreement with a third party called Gurgaon Infospace Ltd (GIL).
Unitech neither owns nor has leasehold interest in the land, but has commercial rights only through a revenue- and profit-sharing arrangement with GIL for this project. GIL is a subsidiary of IST Ltd (a company involved in manufacturing of precision turned, milled and drilled components. IST, Unitech, GIL and UDPL entered a joint development agreement on 16 November, 2006, which entitles UDPL to 72% of the gross sales and GIL to the rest.

Source: LiveMint

   , , ,