After splitting Indiabulls among promoters last year, Chairman Sameer Gehlaut will buy 10 per cent stake in the group's property development company, Indiabulls Real Estate, for Rs 538 crore.
Gehlaut will buy five per cent equity shares in the company through preferential allotment and subscrib to 43.6 million warrants, equivalent to five per cent stake in the company on conversion, at a price of Rs 67 a share, a 59 per cent premium to the stock's closing price on Friday.
"The company needs growth capital which can be brought in either through equity or debt. We did not want to raise debt. We want to reduce debt by 20 per cent in this financial year," said Gagan Banga, vice-chairman and managing director, Indiabulls Housing Finance, and spokesperson for the group.
On Gehlaut's plan to buy the stake at 60 per cent premium, Banga said: "Even stocks of most robust real estate companies have been beaten down in the current market conditions. We feel this is the right valuation of the company now," he said. On how he was planning to fund the stake buy, Banga said Gehlaut had robust dividend in the previous financial year, which was to the tune of Rs 400 crore to Rs 500 crore.
