Piramal's Realty Fund to Exit Omkar's Worli Project for Rs 500 crore : The Economic Times

Deal offers an absolute return of 146% over investment of Rs 200 cr made in 201

Piramal Fund Management, the realty investment platform of Piramal Enterprises, has entered into an agreement to exit Omkar Realtors & Developers' luxury residential project `Omkar 1973' in Mumbai's Worli locality for about . 500 crore. The exit is valued in abso` lute returns of around 146%, while annual returns are pegged at 24%.The fund had invested as much as . 200 crore between August and De` cember 2011 as equity capital. The term sheet for the exit from Omkar's Worli project has already been signed, while the transaction will be concluded by December.

The fund had made this investment from Indiareit Domestic Scheme IV , which was raised in June 2010 with ` . 922 crore corpus deployed across eight transactions. The fund has already returned `. 106 crore out of this to investors from three partial exits.

Of these, two investments were made in self-development projects being carried out under the brand `Address Makers' in Whitefield and Electronic City, Bengaluru. The third partial exit was made through interest payments received from an investment with the Marvel Group in Pune. “From our investors' perspective, exits are perhaps the most visible and important aspect of the investment life cycle and we are pleased to be validating the performance of Scheme IV at this early juncture,“ said Khushru Jijina, MD, Piramal Fund Management.

“With the exit from Worli, we will be returning a large quantum of the initial corpus at a very attractive return. This cycle of exits from Fund IV will continue as we proactively generate more exits in the coming months.“ With the exit from Omkar 1973, the fund will make its first full exit thereby resulting in four of the eight transactions having generated a return at this stage. This is also one of the first major exits for any private equity fund from a superluxury project.

“The exit is being worked out from internal accruals generated through our project sales. We have managed to sell more than half the project so far and around 5 lakh sq ft under the 20:80 payment scheme alone,“ said Gaurav Gupta, director, Omkar Realtors & Developers.

The project, with three high-rise towers, is spread over nine acres, off Dr Annie Besant Road. The under-con struction project is being designed by Foster + Partners and has received all approvals. It will of fer 3-4 BHKs priced between ` . 40 crore and `. 100 crore, and is scheduled to be deliv ered in 18 months.

Additionally, the fund is working on one more complete exit and another par tial exit within the next quarter. According to Piramal Fund Management, with all of the above exit proceeds being distributed, Domestic Scheme IV will have returned more than 75% of the fund corpus by December 2015.

According to Jijina, Piramal Fund Management is also planning to launch one more fund in the domestic market and this will invest in mid-income projects. “We are working on one more fund-raising proposal but the fund size and the structure of the same is yet to be finalised,“ Jijina told ET.