The Board of Directors of Mahindra Lifespace Developers Limited (MLDL) has approved a strategic restructuring involving the ‘Alembic Undertaking’, a Bengaluru real estate project. This involves a slump sale to its wholly-owned subsidiary, Mahindra Blossom Developers Limited (MBLDL). Subsequently, MLDLD will transfer a 49% stake in MBLDL to Mitsui Fudosan (Asia) Pte. Ltd. (MFA), formalizing a joint venture structure. The total net consideration for the slump sale is capped at Rs. 100 crores.
Board Approves Key Restructuring Transactions
On February 9, 2026, the Board of Directors of Mahindra Lifespace Developers Limited (MLDL), following recommendations from the Audit Committee, approved several material transactions pertaining to its real estate development project in Bengaluru, referred to as the ‘Alembic Undertaking’.
Transaction 1: Slump Sale of Project Assets
The primary step involves the transfer of the ‘Alembic Undertaking’ (including all relevant assets and liabilities) as a going concern on a slump sale basis to Mahindra Blossom Developers Limited (MBLDL), which is currently a wholly-owned subsidiary of MLDLD.
- The ‘Alembic Undertaking’ has not contributed to the turnover, revenue, income, or net worth of MLDLD during the last financial year.
- The consideration received from this slump sale is a net amount not exceeding Rs. 100 crores, after deducting relevant liabilities.
- The Business Transfer Agreement is targeted for execution before March 31, 2026.
- The transaction is classified as a related party transaction, supported by an independent valuation report confirming ‘arm’s length’ terms.
Transaction 2: Equity Transfer to Mitsui Fudosan (MFA)
Following approvals, MLDLD will transfer 49% of its equity stake in MBLDL to Mitsui Fudosan (Asia) Pte. Ltd. (MFA). This transaction will reduce MLDLD’s stake in MBLDL to 51%.
- The transfer of 12,25,000 equity shares (face value Rs. 10 each) aggregating to Rs. 1,22,50,000 is proposed to be done at par.
- MFA is identified as an unrelated party, and this initial transfer is not considered a related party transaction.
Transaction 3: Subsequent Rights Issue Subscription
To meet further funding requirements for the project, MBLDL will undertake a rights issue of equity shares, which both the Company and MFA will subscribe to in the ratio of their respective shareholding.
- The Company (MLDL) and MFA will subscribe to the rights issue in the ratio of 51:49, respectively.
- MLDL is proposed to subscribe to 11,74,53,000 equity shares (face value Rs. 10 each) aggregating to Rs. 117,45,30,000 on a cash basis.
- The issuance of these shares, along with potential debt instruments, is required to be undertaken at ‘arm’s length’ basis (subscribed at face value).
Joint Venture Governance Structure
The execution of the Shareholder’s Agreement (SHA) and Investment Agreement (IA) will govern the management of MBLDL.
- The Company (MLDL) shall have the right to nominate upto three directors on the MBLDL board.
- MFA shall have the right to nominate two directors.
- An Independent Director will also be appointed as required by law.
Rationale for Restructuring
The transfer of the Alembic Undertaking to MBLDL and the subsequent JV structure are intended to provide operational flexibility, efficient management, sharp execution focus, and better monitoring of the residential real estate project in Bengaluru.
The completion of all proposed transactions is subject to the receipt of all necessary approvals, including shareholders’ approval, expected before March 31, 2026.
Source: BSE
