StanC PE to infuse . 2k cr, while Tata arm ` will put in about . 1k cr to buy assets `
Tata Realty & Infrastructure, Tata Group's real estate and infrastructure development arm, is joining hands with Standard Chartered Private Equity to create a ` . 3,000-crore investment platform, two people familiar with the development said.
Standard Chartered will infuse . 2,000 crore while Tata Realty ` will put in about ` . 1,000 crore to buy commercial assets across the country.
“The total equity infusion will be to the tune of $250 million (about . 1,625 crore) from both the enti` ties together and the rest of it will be in the form of debt at the project level,“ said one of the persons. An email query sent to Tata Realty & Infrastructure remained unanswered until late evening on Wednesday, while Standard Chartered Private Equity declined to comment. “The companies are at the final stage of paperwork and expected to close the deal soon,“ the second person said.
The development signals growing interest among private equity firms in tying up with real estate developers to build investment platforms and derive stable returns. Last month, in one of the largest FDI deals, Standard Chartered PE had announced its investment commitment worth $200 million (.`1,300 crore) in Shapoorji Pallonji Group along with World Bank member IFC and the Asian Development Bank for affordable housing.
According to a senior executive managing one such platform, the objective of such partnership for the developer is to raise funds for attractive opportunities, while funds can expect post-tax returns of more than 20% with their equity exposure in real estate projects. Among other recent deals, Godrej Properties and a consortium led by Dutch pension service provider APG entered into an agreement for ` . 1,050 crore investment in residential projects across major cities in India.
Similarly, US PE firm Blackstone formed a special purpose vehicle with Embassy Property Developments while sovereign wealth fund Qatar Investment Authorities agreed to back real estate firm RMZ to buy commercial assets. Property developer Lotus Greens raised money from Red Fort Capital while Mahindra Lifespace Developers entered into a JV with a unit of Standard Chartered Bank to develop residential projects.
Private equity investment in the real estate sector grew nearly three-fold in the six months to June, compared to the first half of previous year. According to data from real estate consultant Cushman & Wakefield, PE funds pumped in ` . 11,180 crore in the country's commercial and residential real estate between January and June, compared to ` . 4,002 crore in the year-ago period.
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