Raymond to demerge real estate biz, Raymond Realty

New Delhi: Raymond, on Thursday, said it will demerge the real estate business to unlock the value for shareholders and harness growth potential in the Indian property market.

In a regulatory filing, the company informed that its board has approved the scheme of arrangement of Raymond (demerged company) and Raymond Realty (resulting company) and their respective shareholders.

As per the scheme of arrangement, each Raymond shareholder will receive one share of Raymond Realty for every one share held in Raymond.

The standalone operational revenue of the real estate division stood at Rs 1,592.65 crore in the last fiscal, accounting for 24% of the total revenue of Raymond.

This will be subject to the requisite approvals and sanction of the jurisdictional bench of the National Company Law Tribunal (NCLT) and subject to the approval of shareholders and/or creditors, central government, or such other competent authority as may be directed by the NCLT.

Upon the scheme coming into effect on the effective date, on demerger, Raymond Realty would issue 6,65,73,731 equity shares of Raymond Realty having a face value of Rs 10 each to the equity shareholders of Raymond.

The shares issued by Raymond Realty would be listed on BSE and the National Stock Exchange of India (NSE).

Explaining the rationale, Raymond said it seeks to reorganise the real estate business carried on by itself and through its subsidiaries.

The company explained that to exploit the growth potential of the real estate business and attract a fresh set of investors/ strategic partners to participate in the real estate business, it is proposed to consolidate the entire real estate business of the Group under one single entity.

"Therefore, it is proposed to demerge the Real Estate Business Undertaking of Raymond into Raymond Realty thereby unlocking the value of the real estate business of Raymond as a whole," the company said.

Raymond said the new entity will seek automatic listing on stock exchanges.

Gautam Hari Singhania, Chairman cum Managing Director of Raymond, said, "Having stated that now we have clear three vectors of growth at Raymond group i.e. lifestyle, real estate and engineering, this corporate action is in line with creating shareholder value creation.”

This strategy to demerge the real estate business into a separate company that will be listed through an automatic route is another step to enhance the shareholder value, he added.

"The existing shareholders of Raymond will get the shares in the new listed Real Estate company in a ratio of 1:1," Singhania said.