Real estate developer D B Realty will allot 5 crore warrants to investors, including Rakesh Jhunjhunwala and his wife, within days of Godrej Properties cancelling its plans to invest Rs 700 crore in the company to pick up 10 per cent stake and set up a joint platform.

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The company will raise Rs 1,575 crore through issue of warrants in multiple tranches to the promoter group and other investors, as part of its plan to become debt free.

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In a regulatory filing, D B Realty said the board in its meeting held on Wednesday approved allotment of further 5 crore warrants convertible into equivalent numbers of equity shares to six non-promoter investors.

The company proposes to allot 1 crore warrants each to Rekha Jhunjhunwala, Rakesh Jhunjhunwala's RARE Investments, Abhay Chandak and Aditya Chandak. It will also allot 50 lakh warrants each to Lotus Family Trust and KIFS Dealers.

D B Realty had proposed to allot 5 crore warrants to Godrej Properties, but the deal got cancelled.

According to the filing, the proposed allotment of 5 crore warrants is in addition to 7.7 crore warrants to be issued to promoter group and Pinnacle Investments, thus taking the total warrants issued to 12.7 crore.

In the first round, the company has already allotted 13.05 crore warrants to its promoters and Pinnacle Investments, which is a partnership between Prestige group promoter Razack Family Trust and Prestige group CEO Venkata Narayana Konanki.

Post-conversion of warrants into equity shares, the company said the promoters will hold 54.08 per cent stake in the company, Pinnacle Investments 17.97 per cent and these six new investors together 9.98 per cent.

"The total fund infusion into DB Realty Limited post conversions of warrants allotted and proposed to be allotted to Pinnacle Investments, DB Promoters and New Investors will be approximately Rs 1575 crore," the filing said.

The funds raised through the warrants would be utilised primarily to repay debt and augment long term capital requirement of the company.

"Pursuant to the infusion of funds, the company on a stand alone basis is expected to be debt free on 31st March, 2022. The company believes that it is going to play a pivotal role in Mumbai real estate with a portfolio of more than 100 million sq ft of prime real estate in Mumbai Metropolitan Region," the filing said.

The inclusion of blue chip investors clearly indicates the confidence and faith the investors have in intrinsic value of the company and its business, it added.

"From a peak liability of Rs 4142 crore, the company expects to be debt free in the near term. The focus of the company going forward is to partner with established large real estate developers to unlock the value of its large real estate portfolio. This balance sheet light model will enable the company to remain largely debt free going forward too," D B Realty said.

Real estate firm Godrej Properties has decided to cancel its plans to invest Rs 700 crore in DB Realty to acquire 10 per cent stake and set up a joint platform amid concerns raised by minority shareholders and other stakeholders.

Last week, Godrej Properties had announced that it would invest Rs 400 crore to acquire around 10 per cent stake in DB Realty and another Rs 300 crore to set up a joint platform for undertaking slum redevelopment projects.

But on Friday, Godrej Properties decided to cancel the deal amid concerns raised by minority shareholders and other stakeholders.

"We've decided against going ahead (with the deal with D B Realty) post the feedback we received from various stakeholders including our minority investors,? Godrej Properties Executive Chairman Pirojsha Godrej said.

"There were concerns with the structure of the investment as well as with the slum redevelopment business in general," he had said.

Godrej Properties had said it might continue to explore the possibility of evaluating projects with DB Realty on a case-to-case basis.