The National Company Law Tribunal (NCLT) has approved the scheme of amalgamation and arrangement between Mumbai-based realty firm JP Infra (Mumbai) and its affiliated entities Four D Estates, Four D Buildspace and JP Infra Realty.
Of these entities, Four D Estates, through its wholly-owned subsidiary JP Infra (Mumbai), is engaged in the business of redevelopment projects whereas JP Infra Realty is operating in the construction of projects in greenfield undertaking with acquisition of land and construction of housing projects thereon.
Demerger of the greenfield project undertaking from JP Infra (Mumbai) into Four D Estates is expected to enable carving out of a sole greenfield project undertaking from JP Infra (Mumbai). This will enable JP Infra (Mumbai) to focus on its core expertise of handling brownfield projects involving redevelopment and rehabilitation, the company said in its petition.
Further, subsequent demerger of the greenfield project undertaking from Four D Estates into Four D Buildspace is expected to achieve the desired exit of both Four D Estates and JP Infra (Mumbai) from the greenfield business and focus on their core expertise of handling brownfield redevelopment projects.
As all these entities belong to the same promoter group, the proposed demerger is expected to ensure alignment of the business verticals—JP Infra (Mumbai) and Four D Estates continuing in the brownfield redevelopment projects and JP Infra Realty in greenfield projects involving development of newly-acquired land parcels.
These demergers will achieve an effective structure such that resultant entities—JP Infra (Mumbai) and JP Infra Realty—could attract the right set of investors based on varying industry dynamics, risk and reward involved in brownfield projects as against greenfield projects, the company’s application said.
Further, the proposed amalgamation of Four D Buildspace with JP Infra Realty will eliminate layering and holding company for greenfield projects and enable the promoters of the company to exercise direct control of these entities.
As the real estate sector continues to witness robust growth momentum, several real estate firms in metropolitan regions are restructuring their companies to unlock the value.
Recently, realty developer K Raheja Corp also initiated a process to consolidate its residential real estate portfolio to improve its focus on housing and to increase the scale of the business. The group also expects to attract strategic and financial investments in the company, which is proposed to be its flagship residential real estate development entity.
