Delta Corp to spin off real estate and hospitality arm in massive demerger

Delta Corp Limited, one of India’s leading gaming and hospitality companies, announced on September 24, 2024, the demerger of its Hospitality and Real Estate business. The company aims to create two separate entities through this move, enhancing sector-specific growth and management accountability. The plan, which was approved by Delta Corp’s board, outlines the separation of its non-gaming segments into a newly formed subsidiary called Delta Penland Private Limited (DPPL). This new entity will focus solely on hospitality and real estate.

The proposed demerger is part of a larger strategy aimed at unlocking value for shareholders and streamlining Delta Corp’s operational structure. Delta Corp is listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), and its decision to split the business will lead to the formation of two distinct companies. Investors holding shares in Delta Corp will receive an equal number of shares in DPPL once regulatory and shareholder approvals are secured. This will take between 10 and 12 months, according to the company’s official announcement.

Business split focuses on clarity and investor opportunities

The decision to break up the business has been framed as a strategy to improve transparency and better resource allocation. The primary objective is to allow the management of each entity to focus on its core business. While Delta Corp will remain dedicated to gaming, DPPL will handle all hospitality and real estate assets, which include key properties like The Deltin in Daman and Deltin Suites in Goa.

Delta Corp believes that by separating its operations into two, it will attract specific investors who are more interested in either gaming or real estate. By doing this, the company expects to generate fresh capital and sector-specific investments. The move is also designed to reduce risk across its multiple business verticals, allowing each entity to develop strategies that align more closely with their operational goals.

According to Dilip Vaidya, Company Secretary and Vice President of Delta Corp, the demerger will unlock value for shareholders as the company’s non-gaming assets were often overlooked by investors focused solely on the gaming sector. He emphasized that Delta Corp’s real estate and hospitality arms have significant growth potential, which will now be better realised through an independent management structure.

Shareholders to benefit from enhanced sectoral focus

In terms of the shareholding structure, Delta Corp will issue new shares in DPPL at a one-to-one ratio. This means each shareholder will receive an additional share in DPPL for every Delta Corp share they hold. A fairness opinion report on the share entitlement ratio has been provided by Kunverji Finstock Private Limited, a SEBI-registered merchant banker.

DPPL’s assets include high-value properties like the Deltin Suites, a luxury hotel and casino in Goa, and The Deltin in Daman, a 176-room resort. DPPL also holds investments in under-construction resorts and plans to develop a water park in Dhargalim, Goa.

The scheme of arrangement has been designed under the Companies Act, 2013, and will require various approvals, including clearance from the Securities and Exchange Board of India (SEBI) and the National Company Law Tribunal (NCLT).

Expert opinion: Market reactions and growth potential

Financial analysts have reacted positively to the move, noting that splitting the businesses will likely boost both companies’ market valuations. Investors focused on gaming will find Delta Corp’s core business more streamlined, while those interested in hospitality and real estate can look to DPPL for potential growth. Analysts also suggest that by creating two separate entities, both companies will find it easier to attract sector-specific investments.

The demerger aligns with a broader trend in Indian corporations looking to unlock shareholder value through the separation of business segments. With the gaming sector in India poised for significant growth and tourism in key states like Goa and Daman continuing to expand, both Delta Corp and DPPL are expected to benefit from the focused attention on their respective industries.

Key takeaways

• Delta Corp Limited announced the demerger of its Hospitality and Real Estate business into Delta Penland Private Limited.
• Shareholders will receive shares in the new company on a one-to-one basis.
• The move is expected to unlock value for investors by creating sector-focused entities.
• Regulatory approvals are anticipated within 10-12 months.
• Analysts believe the demerger will improve operational efficiency and attract targeted investments.