The company's board of directors approved the divestment of the remaining 51 percent shareholding in Max Speciality Films Limited (MSFL), a subsidiary of Max Ventures & Industries Limited (MaxVIL), in two separate tranches to Japan's Toppan Inc., a 49 percent strategic partner in MSFL, at an enterprise value of Rs 1,350 crore on Sunday, according to a BSE filing. This translates into an equity value of about Rs 600-650 crore (subject to customary adjustments).
"We have so far focuseed on commercial development, but we will now enter the residential segment and are in the final stages of acquiring three land parcels," said a company source.
The company will also change its name from MaxVIL to Max Estates Ltd.
"Board of Directors has authorised the investment and finance committee of the Board to explore various modalities for restructuring with its wholly owned subsidiary, Max Estates Limited, and be renamed as Max Estates Limited after receiving required statutory approvals. The change of name will bring better synergies between the name and the operations of the company," the company said in the filing.
Toppan would also be taking over the debt of MSFL as part of the deal. After acquisition of 49% stake in 2017 for about Rs 200 crore Toppan became a strategic partner of MaxVIL.
Engaged in businesses of real estate and specialty packaging films MaxVIL has decided to exit from the non-core businesses.
Post this exit, the Company will completely focus on the real estate business in the premium residential and commercial space in Delhi-NCR.
“The decision to divest our residual 51% stake in specialty packaging business to the existing partner is to generate additional growth capital to deploy in the real estate business that offers tremendous growth opportunities,” said said Sahil Vachani, MD & CEO of MaxVIL.
After the divestment, the company will be able to create a war-chest of more than Rs 1,000 crore funded from sale proceeds, internal accruals, and potential commitment from financial investors. This will help in expanding the residential and commercial real estate footprint in Delhi-NCR.
New York Life Insurance Company, a longstanding partner of the Group, is a strategic investor in the company, owning about 23% stake.
Additionally, it has also invested at the project level through SPVs (Special Purpose Vehicles) route by picking up a 49% stake in Max Square, a commercial project on the Noida-Greater Noida Expressway.
The company will continue to look for such strategic/financial partners to back its expansion plans.
MaxVIL is in advance discussions with nearly half a dozen landowners to acquire and develop prime land parcels in Delhi-NCR.
“Backed by a successful track record of developments in the commercial space such as Max Towers and Max House, strength of differentiation in design, end-user experience, and the overall impeccable governance of the Max Group; MaxVIL is well-positioned to scale both its commercial and residential businesses, and deliver substantial value to all stakeholders,” Vachani said.
The company recorded consolidated revenues of Rs 3,783 million – up 31% from the year-ago period. The consolidated EBITDA rose 20% from the corresponding year-ago period to Rs 627 million.
“Q2FY22 proved to be a splendid quarter for our commercial real estate business. Max Towers and Max House are 93% and 60% leased, respectively, while commanding a 20-25% rental premium in the micro-market. With a strong enquiry pipeline, aided with recovery in the country’s economy, we are extremely confident of 100% leasing of both of our assets this financial year, and of our growth trajectory moving forward,” said Vachani.