Dubai-based Emaar Properties PJSC is set to terminate its decade-old joint venture with Indian partner MGF Development Ltd, two people familiar with the development told ET. The announcement is expected today afternoon.
“Both partners were in discussion to finalise the contours of the separation exercise for nearly a year, which was a complicated process as it involved many running projects and large land parcels of about 7,500 acres spread over various cities in India,” said one of the persons.
The Dubai-based real estate developer had entered India 10 years ago with an investment of more than Rs 7,500 crore in a joint venture named (JV) Emaar MGF Land Ltd. “The Indian promoter — Shravan Gupta, head of MGF Development — has decided to move out of India. Gupta is no longer keen on actively participating in the management of the JV. That was a key issue for this separation,” the second person said.
ET had reported the news on July 21 last year.
Shravan Gupta and chief financial officer of the JV Sanjay Malhotra could not be reached for comments. The company spokesperson did not comment on it either.
The details of the separation schemes are not yet known. There won’t be any cross holdings of ownership in the land or projects after the split, barring a few exceptions.
Emaar Properties, which owns a 48.86% stake in the joint venture in addition to loans and guarantees of about $500 million, is likely to have a bigger share in the pie. All those projects in which Emaar has given loan guarantees will logically go to Emaar.
“The company board has already met earlier this week and has agreed to the separation, said one of the official quoted above. He added further that the final agreement would be signed today. The people cited above said any division of assets would be on a project-to-project basis. Both sides have appointed real estate and tax consultants for finalising a possible deal, he added.