Dosti-Suraksha JV to acquire Jaypee Infra for Rs 7,350 crore


New Delhi: Lakshadweep Pvt Ltd., a joint venture formed by two companies promoted by people with ties to billionaire Dilip Shanghvi, is set to acquire Jaypee Infratech, the insolvency-hit developer that has to deliver about 25,000 apartments in Noida and is the operator of the Taj Expressway.

The proposed transaction by Lakshadweep, a JV between Suraksha Asset Reconstruction Company and Mumbai-based Dosti Reality, will result in the eventual delisting of Jaypee Infratech as almost all its equity capital will be written off, said two people familiar with the development.

“The JV has outdone other leading contenders by a huge margin with a Rs 7,350 crore bid,” said one person.

Other bidders for the company were the Adani Group and a consortium that includes Kotak Realty. Suraksha Asset Reconstruction is promoted by Sudhir V Valia, the brother-in-law of Shanghvi and an executive director on the board of his company, Sun Pharmaceutical Industries. Dosti Realty is a real estate company promoted by Shanghvi’s cousin Deepak Goradia. It provided homes to 8,600 families and has a portfolio of 9.5 million square feet across Mumbai, according to its website. Valia could not be reached for comment.

Goradia, managing director of Dosti Realty, declined to comment.

“The committee of creditors has preferred the bid of Lakshadweep, which was further negotiated and revised upward on Wednesday,” said one person. Lakshadweep had initially offered Rs 6,900 crore, which was revised to Rs 7,350 crore, the person said.

Jaypee Infratech has outstanding loans of about Rs 8,500 crore. With the Lakshadweep offer, the banks may be able to recover over 80% of their dues, said one of the lenders.

Under the proposed transaction, Lakshadweep will make an upfront payment of Rs 1,200 crore to the banks, the second person said. It has earmarked Rs 4,000 crore to be paid from the sale of land and another Rs 2,000 crore will be converted into long-term non-convertible debentures. A small equity stake is also part of the offer. “The lenders will have a combined equity stake of 3.5% in the company and the balance will be with the acquirer,” said the second person. All the existing equity capital of the company will be written off, thereby delisting the company, he added.

Lakshadweep will also put in the funds needed to complete the construction of apartments in Noida, the people said. “The JV will have to complete the unfinished flats in Noida, which faces a shortfall of about Rs 2,000 crore,” one person added.

Lakshadweep’s offer is superior to the Adani Group’s bid of about Rs 6,000 crore, said one person.

“Lakshadweep’s bid was more flexible,” he added.

Deal terms

The Adani Group offer was subject to many conditions and made the lenders wary. The conditions included waiver of payment of compensation to home buyers and farmers and waiver of land transfer charges.

Valia has made a series of investments in the financial sector through listed entity Fortune Financial Services (India) Ltd., which has interests in banking, institutional and retail broking, housing finance and auto finance. It entered the non-performing asset resolution business through the acquisition of Distress Asset Specialist Pvt Ltd. in 2015.

A consortium comprising Kotak Realty and Cube Highways offered about Rs 8,000 crore for Jaypee. It wants to separate the highway operations from the real estate project.

The proposed deal will give Lakshadweep complete control of the 165 km express highway between Greater Noida and Agra, which generates annual revenue of about Rs 400 crore, with an annual growth rate of about 20%. In addition, it will get two plots of land of 1,250 acres each –— one near the planned airport at Jewar and the other near Agra.

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