Blackstone has struck its second big private equity deal in real estate sector this year by acquiring DLF Ackruti Info Parks (Pune) Ltd, an IT special economic zone in Pune, from realty major DLF Ltd and its joint venture partner Hubtown Ltd (formerly Ackruti City) for Rs 810 crore ($153 million).
DLF Ackruti Info Parks is a 25 acre SEZ, with a built-up area of nearly 2.5 million sq. ft. DLF and Hubtown held 67 per cent and 33 per cent equity shares, respectively, in the company.
The transaction is in line with DLF’s recent moves to divest non-strategic assets to raise money for cutting its outstanding debt.
At 11:40 am, shares of DLF Ltd were trading at Rs 192.40 a piece on the BSE, down 0.10 per cent from the previous close. Hubtown scrip was almost unchanged from the previous day’s close.
DLF has a net debt of Rs 22,519 crore as on September 30, 2011, which was primarily due to delays in receiving payments from its non-core assets sales. The firm plans to cut its debt to Rs 19,000-19,500 crore by the end of this financial year and raise upto Rs 7,000 crore through sale of such non strategic assets over the next three years to reduce its debt further.
Incidentally, the announcement of the latest deal came on the same day credit rating agency CRISIL downgraded various outstanding debt instruments of the real estate firm, including term loan of Rs 11,656 crore and non convertible debentures of Rs 5,000 crore from ‘A+/Stable’ to ‘A/Negative’
Blackstone Bets Big On Indian SEZ Investments
For Blackstone, it is yet another big realty exposure in India after striking a similar secondary deal.
In what was the largest private equity deal in India’s real estate space during the past three years, it invested around Rs 875 crore to buy 37 per cent stake in Manyata Promoters Pvt Ltd, a SEZ promoted by Bangalore-based real estate developer Embassy Property Developments Ltd and the landowner Veeranna Reddy. The transaction was a secondary share purchase from the Embassy group that valued the SEZ at nearly $550 million.
Blackstone Real Estate Partners, which has invested in properties like Waldorf-Astoria Hotel, had infused $18 million in Bangalore-based project and construction management firm Synergy Property Development Services three years ago. Last year, it also agreed to manage Bank of America Merrill Lynch’s Asian real estate assets worth $2 billion-plus, which also included investments in Indian projects by developers like BPTP and DLF.
PE Activity In Real Estate Sector
Although the private equity action in Indian real estate sector has been muted, there have been a few large deals this year, besides a string of small and mid-sized deals across income-generating developments.
In February 2011, Ascendas India Trust entered a deal to acquire a portfolio of five buildings in Phoenix Infocity Pvt Ltd’s SEZ for Rs 855 crore. Kotak Realty Fund sold Peepul Tree Properties (an IT park in Goregaon) to Tata Realty and Infrastructure Ltd and Tata Realty Initiatives Fund 1 for Rs 525 crore.
A few weeks ago, Pragnya Fund, a real estate-focused private equity fund, invested around $5 million (Rs 26 crore) in Hyderabad-based Vision Heights Ltd to develop a 50 acre township in Rajahmundry, Andhra Pradesh.
Other financial groups are also looking to tap into the opportunity for the future. Recently, ArthVeda Fund Management, a unit of Dewan Housing Finance Corp, said that it planned to raise Rs 200 crore to invest in greenfield real estate projects.