Private equity giant Blackstone Group is in talks to buy Jai Corp-owned residential realty-focused alternative investment fund, Urban Infrastructure Opportunities Fund, to ramp up its exposure in India’s housing market.
The Economic Times reported earlier in the day that the PE giant is set to acquire the fund for about Rs 800 crore ($123 million), quoting three unnamed people familiar with the development.
“Both entities have almost zeroed in on the structure and terms of the proposed transaction. A final term sheet for the same will be signed with the asset management company. Following this, Blackstone will make an offer to the fund’s investors,” the people told the financial daily.
The report added that Blackstone would look at taking over the asset management company after it becomes a major unit-holder in the fund. Anuj Puri’s new venture Anarock Property Consultants will be roped in to manage it.
Technically, a PE firm cannot buy a private equity fund. For a deal of this nature, a PE firm will either have to acquire the fund manager or take over the assets of the fund through a secondary transaction.
Urban Infrastructure Opportunities Fund is managed by Urban Infrastructure Venture Capital Ltd, which also advises Urban Infrastructure Capital Advisors, which in turn manages a Mauritius-based offshore fund.
Urban Infrastructure Venture Capital is a wholly-owned subsidiary of publicly listed company Jai Corp Ltd, which has business interests in special economic zones, manufacturing and infrastructure, besides investments in residential real estate. Anand Jain, the chairman of Jai Corp, is a confidante of Reliance Industries chairman Mukesh Ambani.
Email queries to Blackstone, Jai Corp and Anarock Property Consultants did not elicit any immediate response.
According to the company website, Urban Infrastructure Opportunities Fund was launched in mid-2006 and has a tenure of seven years with two extensions of one year, each. It counts Life Insurance Corporation, State Bank of India, ICICI and Axis Bank as investors. The fund with a corpus of Rs 2,434 crore made over 30 investments across top realty markets in India.
A second fund under Urban Infrastructure Real Estate Fund, which has a tenure of eight years with two extensions of one year, each, had raised $295 million.
The development comes days after another rumoured transaction, wherein Blackstone Group along with a few other investors, were in the race to acquire the fund manager of real estate-focussed IL&FS India Realty Fund I.
If the deal between Urban Infrastructure Venture Capital and Blackstone materialises, it will mark Blackstone’s big bang entry into India’s residential real estate market. While the US-headquartered company has created one of the biggest portfolios of commercial properties in India, and had recently set up a unit for retail assets, its exposure in the housing market had been limited.