Gautam Adani plans mega entry into Delhi-NCR with Jaypee real estate bid

The transaction, if successful, will expand the conglomerate's real estate business four-fold, the people cited above said on the condition of anonymity. This will be part of a “planned packaged offer" to the lenders in the insolvency proceedings of Jaiprakash Associates Ltd, the flagship of Jaypee Group, the people added. Adani has already planned to bid for Jaypee's cement assets.

 

“As a resolution package, Adani may offer around ₹15,000 crore in total to the lenders to take over two businesses of Jaypee Group—real estate and cement," one of the two people cited above said.

Capturing demand in NCR

The buyout aims to capture soaring real estate demand around the country’s capital's fast-growing regions like Greater Noida, Gurugram and Faridabad. Jaypee Group’s realty assets range from premium golf-centric residences to sprawling townships.

The 452-acre Jaypee Greens township in Greater Noida offers luxury villas and apartments with golf courses, parks and lakes, a sports complex, a 60-acre nature park and a 5-star Spa resort in collaboration with Thailand’s Six Senses Spa. Jaypee Greens Wish Town Noida is a 1,063-acre township with villas, high-rise apartments, penthouses and commercial shops, a golf facility, a 500-bed super-specialty Jaypee Hospital and a school.

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Motor racing track in Jaypee Greens Sports City along the Yamuna Expressway is also part of Jaypee's realty real estate business. Apart from sports, commercial and institutional facilities, it also offers 2,433 residential plots, as per the group’s annual report. It also owns several other projects in the NCR region. During fiscal 2023, the group resumed two of its two stalled projects Kalypso Court and Knights Court in the capital region.

If the deal goes through, it may position Adani as a serious contender in India's realty space, rivalling large industrial houses such as Godrej Group, Tata Group, Larsen and Toubro Ltd., Gautam Singhania’s Raymond Group, Welspun group and Mahindra & Mahindra group.

Primarily around Mumbai

Adani owns most of its real estate businesses through two family-owned entities Adani Properties and Adani Realty. If creditors accept Adani’s offer, the Jaypee Group’s real estate business too may be owned by these firms, said the first person. Adani's realty business is so far primarily around Mumbai, and is worth about ₹6,000 crore currently, this person said, excluding the Dharavi slum rehabilitation project and a 24-acre government land parcel to be developed in Mumbai's Bandra, said the first person.

“The Dharavi rehabilitation project may entail ₹40,000 crore, of which ₹5,600 crore commitment has already been made and about ₹15,000 crore has been set aside for the initial phase," said the first person.

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Jaypee's real estate business was worth over ₹19,000 crore at the end of FY23, according to the group’s annual report.

Separately, in February this year, Adani outbid Larsen & Toubro by offering around ₹5,000 crore to redevelop Maharashtra State Road Development Corporation's (MSRDC) 24-acre prime land at Bandra Reclamation near the Bandra-Worli Sea Link.

“Adani has paid for the EoI for the land redevelopment. The cost of acquisition will be around ₹25,000 crore, post which the group will get the commencement certificate (CC). After that the cost of redevelopment will be at least another $2.5 billion," said the first person.

“These two projects in Mumbai have been kept outside the ₹.6,000 crore real estate business of Adani because the actual project redevelopment work is yet to start, and their completion will depend on a number of other approvals from local authorities," said the first person.

These two projects, along with the plan for Jaypee, point to the group's larger realty play.

Early to evaluate

The committee of creditors of Jaypee Group, which includes 30-odd lenders, is likely to hold its second meeting on Tuesday and once the lenders float a proposal for resolution applicants, Adani group will place an offer.

A banker, who is a part of the committee said it was too early to say how they would evaluate a proposal, if any, from the Adani group.

“Once the bidding starts, anyone interested in resolution would have to come through that route," said the banker.

“The synergies (between Adani and Jaypee) are high, but the deal is at a planning stage. There could be significant changes in the plan, depending on the creditors’ demand," said the first person.

Adani’s latest plan will need approval from the majority of Jaypee Group’s creditors including State Bank of India, ICICI Bank Ltd, IDBI Bank Ltd, Life Insurance Corp of India, Canara Bank and Axis Bank Ltd. Financial creditors of Jaiprakash Associates have submitted claims worth ₹ 51,584.3 crore (including claims of ₹ 1,562.6 crore from home buyers) to the interim resolution professional Bhuvan Madan, who did not wish to comment.

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An email sent to the spokesperson of ICICI Bank remained unanswered till press time. Emails sent to Adani Group, Jaypee Group and the RP also remained unanswered. 

A spokesperson for SBI said that as a policy, the bank “does not comment upon such matters."

Another banker said that negotiations are unlikely outside the resolution framework since it has already been admitted by the National Company Law Tribunal (NCLT).

SBI has submitted the highest claim at ₹ 15,465 crore or 30% of the total claims. ICICI Bank with ₹ 9,203 crore has the second highest claim against JAL. ICICI Bank accounts for almost 18% of the total claims. IDBI Bank has claims worth ₹ 5,794 crore, and LIC has claimed ₹ 3,021 crore as financial creditors, as per latest regulatory filings.

On 3 June, NCLT allowed insolvency proceedings against Jaiprakash Associates, by admitting a plea filed by ICICI Bank.

A 22 July NCLT order cited a filing by SBI which stated that lenders had approved the creation of a real estate SPV for transferring Jaypee Group’s realty assets. The NCLT is yet to approve this. This order was in the case of Jaypee Cement Corp. Ltd, a wholly owned subsidiary of Jaiprakash Associates.

“The fair market value of assets owned by the corporate debtor is substantially higher than the outstanding liabilities as reflected," as per a filing of Jaiprakash Associates referred to in the 3 June NCLT order cited earlier.

Despite selling several including some cement plants and infrastructure assets including the Yamuna Expressway in the last few years, Jaypee remains in default.

Reflection of demand

Adani’s real estate push reflects the surging demand in India's real state sector. In 2024 so far, the Nifty Realty index is up 40%, and over the past year, the index has zoomed by 94%, making it one of the best benchmark indices in the listed space.

As per Jaypee’s own annual report, real estate sector in India is expected to reach $ 1 trillion in market size by 2030, up from $200 billion in 2021 and contribute 13% to the country’s GDP by 2025.

According to Savills India, real estate demand for data centres is expected to increase by 15-18 million sq. ft. by 2025.

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JAL’s total revenue increased from ₹.3364.22 crore in FY2022 to ₹.4162.49 crore in fiscal 2023, on the back of rising income from the group’s hospitality and real estate divisions, said the group.

The company has already announced its plans to sell cement, clinker and power plants with an aggregate cement capacity of 9.4 mtpa, along with clinker capacity of 6.7 mtpa and a thermal power plant with aggregate capacity of 280 MW. The group also owns large EPC projects such as dams and power projects in locations including Bhutan, Nepal, Gujarat, and Telangana.