The largest CDMA operator Reliance Communications has decided to hive off its real estate assets, pegged at around Rs 12,000 crore, into a separate listed company as part of monetizing the non-core business of the heavily indebted telco, which is sitting on a debt pile of over 32,800 crore. Besides unlocking the value of its real estate, RCom shareholders will also free shares in Reliance Properties in a ratio 1:1. Indicative value of Reliance Properties shares is Rs 60 per share and market price of RCom share is Rs 130. This translates into almost 50 per cent enhancement/addition in shareholders value of RCom.
"Board of directors has in principle decided on a demerger of the real estate held by RCom into a separate unit, Reliance Properties. The preliminary and indicative monetisable value of RCom's real estate on development is estimated by. Independent valuers at over Rs 12,000 crore ($ 2 billion), which is equal to Rs 60 ($1) per RCom share," the company said in a statement. The demerger is aimed at creating large shareholder value, similar value created from the initial demerger of Anil Ambani Reliance Group from Reliance Industries in 2005.
The proposed separation of real estate into a separate unit is part of RCom's strategic plan to divest non-core assets, and focus on its core wireless and enterprise business, the statement said. Reliance Properties will be a separate listed company and will work with leading global partners to develop the real estate. All shareholders of RCom will receive free and fully tradeable pro-rata shareholding in Reliance Properties, based on their existing shareholding in RCom, it said.
The properties proposed to be developed by Reliance Properties include prime land at Dhirubhai Ambani Knowledge City in Navi Mumbai measuring nearly 135 acres, with saleable area of over 15 million square feet and its another property near Connaught Place in New Delhi spread across nearly 4 acres.
"The board has constituted a committee to consider the matter in detail, and prepare the necessary demerger scheme, etc. In December 2012, RCom had announced setting up a joint venture with Chinese real estate firm Wanda Group.
The net debt of the company stood at Rs 38,864 crore by end of March 2013.
