New Delhi: Dubai-based realty firm Emaar Properties and India's MGF Development have decided to end their 11-year-old joint venture through demerger of Emaar MGF Land Ltd into two separate entities.
Emaar Properties, which entered India in 2005 with largest FDI in the realty sector, has invested about Rs 8,500 crore in Indian real estate market through its JV firm Emaar MGF.
The two partners held about 49 per cent stake each in the joint venture firm and the rest by financial institutions. The JV has currently a land bank of around 8,000 acres and 53 ongoing residential and commercial projects.
In a filing to Dubai Financial Market, Emaar Properties said it has "agreed to take steps for the reorganisation of Emaar MGF Land by way of scheme of arrangement (demerger)".
The reorganisation is being done to give greater focus on its Indian operations and for the purpose of developing the potential for further growth and expansion of the business, said the Dubai-based company, which built the world's tallest tower Burj Khalifa.
"This reorganisation will enable Emaar to implement the focused strategy for its real estate business in India and will allow the business to undertake future expansion strategies. It will also enable Emaar to drive the development of ongoing projects in India," Emaar Properties said
Separately, Emaar MGF said the board in its meeting held on April 11 decided to take steps for reorganisation of the company through a scheme of demerger to be filed in the Court citing similar reasons.
The board authorised the company to execute necessary agreements and documents in respect thereof.
Although both Emaar Properties and the JV firm Emaar MGF did not clearly stated in their regulatory filings, sources said the two main partners have agreed to part ways.
"The joint venture will be demerged into two separate entities. This is being done to facilitate capital in the company and delivery of the projects," a senior company official associated with the process told PTI.
The projects and land bank would be divided between the two partners, sources said.
When contacted Emaar MGF spokesperson declined to comment on the issue.
There have been speculations in the market about their separation in the last few years. However, Emaar Properties had in July last year termed India as a key market and said it was committed to the success of its projects in the country through its joint venture firm Emaar MGF Land.
Delhi-based Emaar MGF Land Ltd started operations in India in February 2005. The JV had to deal with controversies related to the Commonwealth Village in the National Capital due to delays and also alleged violation of permissible floor area with excess construction in the project.
The company is engaged in residential, commercial, retail and hospitality projects across India in cities like Gurgaon, Chennai, Hyderabad and Indore among others.