Unitech Plans Aggressive Entry in South India Real Estate

December 28, 2007	(Be the first to rate this story!)  Loading ...
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Unitech is making a volatile entry into the mushrooming South India Real Estate market. One of the largest Real Estate Developers of the country, Unitech is about to announce two joint development deals, covering a prime area of around 1400 acres in Hyderabad and Chennai.

The Real estate major will soon disclose its 50:50 joint venture deal with serial entrepreneur Prasad V Potluri’s PVP Enterprises which owns around 1,300 acres in Hyderabad’s Shamshadabad region, the most well known part of the city in regards to property development.

Another important deal on the card is a 55:45 joint venture deal for developing 8.8 million sq ft of residential property on the 70-acre Binny land near Perambur in north Chennai, owned by SSI, sources privy to the development told ET.

In February this year, PVP Enterprises picked up a controlling stake in SSI. It now owns 62% equity stake in SSI, which include acquisition of 42% equity stake held by the Kalpathi brothers - Aghoram, Ganesh and Suresh, as well as 20% acquired from the public through an open offer in October.

PVP Enterprises pumped in Rs 750-800 crore for the stake. Kalpathis still hold 29% stake in SSI, the rest 9% with QIBs and others. Besides the 70 acre Binny property, SSI also owns prime property, including an IT Park, developed over 100 grounds (one ground = 2,400 sq ft), at Vadapalani in West Chennai, as well as the Dasaprakash Hotel property in Ooty.

A merger is expected between SSI and PVP Enterprise, a formal announcement is expected in a day or two, even as the merger ratio between the two companies has been tentatively finalized. “For every three shares of SSI, one share of PVP Enterprise will be allotted. While the process for merger has been set in motion, it is still not clear whether SSI will undergo a name change,” sources privy to the deal said.

Sources revealed that all existing loans of PVP Enterprise are being converted into equity. This will make it a debt-free company, after the merger. The move will result in a huge scaleable opportunity on the infrastructure front for the merged entity that will also be cash rich.

The development on the Binny land alone involves construction of over 5,000 residential flats, besides retail and commercial space. Even at a reasonably price level of Rs 5,000 per sq ft, the sale proceeds of developing 8.8 million sq ft comes to around Rs 4,400 crore.

News Published Under:   Real Estate Developers |

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