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In a significant development in the real estate sector, DB Realty Limited has recently announced the execution of a share purchase agreement to sell its entire stake in its wholly-owned subsidiary, Real Gem Buildtech Private Limited (RGBPL), to Kingmaker Developers Private Limited for approximately Rs 231.42 crores. The deal, which was signed on November 6, 2023, marks a strategic move by DB Realty to monetize its assets and raise growth capital during a favourable upcycle in the real estate market.
Under the terms of the agreement, DB Realty will be selling its 100% equity and preference shares in RGBPL to Kingmaker Developers, a part of the renowned Rustomjee Group based in Mumbai. This transaction is set to bring in a considerable amount of free cash flow to DB Realty, enhancing the company's financial position. The sale of RGBPL to Kingmaker Developers will also result in the integration of RGBPL into the Rustomjee Group, making RGBPL a valuable addition to the group's portfolio.
The focal point of this transaction is RGBPL's ownership of the under-construction luxury residential project, 'Rustomjee Crown,' located in Mumbai's Prabhadevi area. The project, consisting of two towers spanning over 60 floors, boasts a total saleable area of around 1 million sq ft, with an estimated market value exceeding Rs 1000 crores. This acquisition will enable Rustomjee Group to further strengthen its presence in Mumbai's prime residential property market, aligning with its reputation for delivering high-quality projects such as Rustomjee Seasons, Rustomjee Element, Rustomjee Paramount, and Global City Virar.
Industry experts view this deal as a strategic move for both parties. For DB Realty, the transaction presents an opportunity to optimize its assets and pursue expansion plans in residential and commercial projects across Mumbai, Pune, and Goa. This move is particularly noteworthy considering the current positive sentiment in the real estate sector, as evidenced by DB Realty's stock price, which has surged over 60% this year, reaching Rs 107.45 on the NSE after the announcement.
Meanwhile, Rustomjee Group's acquisition of RGBPL aligns with its growth strategy, enabling the group to diversify its project portfolio and cater to the increasing demand for high-end residential properties in Mumbai. With several ongoing and planned projects across the Mumbai Metropolitan Region, the addition of 'Rustomjee Crown' further solidifies the group's position as a key player in the real estate market.
The transaction between DB Realty and Kingmaker Developers is an all-cash deal and falls outside the purview of any existing scheme of arrangement. Notably, this announcement marks the first major deal by DB Realty since the new related party transaction norms came into effect in July 2023, showcasing the company's commitment to navigating the evolving regulatory landscape.
In conclusion, the DB Realty-Kingmaker Developers deal signifies a significant milestone in the real estate sector, demonstrating the strategic initiatives undertaken by companies to capitalize on market opportunities and enhance their competitive positions. As the real estate market continues to evolve, such strategic collaborations are expected to shape the industry's landscape, leading to further developments and growth opportunities for the stakeholders involved.
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