After deferring its initial public issue, Entertainment World Developers (EWDL), a partner of The Phoenix Mills, is looking to raise Rs 250 crore by selling stake in the company to private equity (PE) investors.
Its managing director, Manish Kalani, said the company that built malls in tier-II and -III towns was in advanced stages of talks with PE firms and was looking at closing the deal in three months.
Kalani declined to name the PE players and quantify the stake the company wanted to sell. However, sources said one of the potential investors was a large US-based PE company.
EWDL, also funded by ICICI Venture, was earlier looking at raising Rs 500 crore through an initial public offering (IPO) to fund projects and give an exit option to investors. But it had to scrap the plan due to volatile market conditions.
Kalani said four of the company’s malls were delayed by six months due to non-availability of funds and delay in leasing, among other things. “We would have used IPO proceeds to fund our malls,” he said.
EWDL was meeting its fund requirements by raising short-term funds from banks at 13.5 to 15 per cent, he said.
It has to convert the optionally convertible debentures issued to ICICI ventures and Phoenix Mills before bringing in the investor. After the conversion, Kalani’s stake will come down from 60 per cent to 36 per cent and Phoenix Mills’ stake from 40 per cent to 33 per cent, while ICICI Ventures will get a 31 per cent stake.
The company plans to open a mall at Raipur in Chhattisgarh by this July, another at Bhilai in Chhattisgarh by September and those in Chandigarh and at Indore in Madhya Pradesh by March and October 2013, respectively. At present, four of its malls are operational at Indore and Ujjain in Madhya Pradesh, and Nanded in Maharashtra.
Kalani said the company was exiting its non-core businesses, such as the Pizza Hut franchise for Central India and its retail venture, Treasure Showcase, as part of a restructuring process. EWDL was in the process of selling the franchise to a Dubai-based company, he said. “Both ventures were forward integration for us, but we shut them as they became non-core to us,” he said.