Oberoi Realty calls for EGM to approve investment of Rs 4,000 crore in completely buying out a JV project

Oberoi Realty (Oberoi), through it’s wholly owned subsidiary Oberoi Constructions Limited (OCL) has a JV – Oasis Realty (Oasis) with Mr Sudhakar Shetty (Sahana Group). Oberoi group holds 32.5% in the JV.

Oasis has constructed a residential project, ‘Three Sixty West’ situated at Annie Besant Road, Worli, Mumbai.

Oberoi has now called for an EGM on December 1, 2022 to buyout the entire JV at an estimated outlay of Rs 4,000 crore in an individual transaction or in a series of transactions over 12 months once the proposal is approved.

Rationale given for the proposed acquisition –

“Oberoi Realty group has funded certain amounts towards construction and development cost of the Project and also placed certain deposits in relation to the Project. With a view to recoup the investment made by Oberoi Realty group in Oasis and to facilitate quick and independent decision making with respect to the sale of the Premises.”

This is a sizeable transaction and the rationale given doesn’t seem to provide the requisite details.

I will be surprised if investors allow this transaction to pass through without raising concerns and getting more detailed reasoning for such a large commitment.

In terms of final outcome, given that promoters own 67.7% and institutions 29.8% in Oberoi, the transaction will pass through unless there is some intervention by any regulatory authorities.

For ease of reference – in 2020 as well, Oberoi had bought 50% of Sahana Group’s stake in a Worli hotel for Rs 1,040 crore.

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