GIC buying $150-mn stake in Godrej Properties in rare entity-level deal
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An investment firm managed by Singapore sovereign wealth fund GIC Pte. Ltd will pick up a stake in Mumbai-based developer Godrej Properties Ltd in a rare entity-level transaction in India’s real estate sector.

Godrej Properties said in a stock-exchange filing on Friday it will raise about Rs 1,000 crore ($150 million) from Ganmat Pte Ltd by issuing 12.76 million preferential shares at Rs 783.5 apiece. That’s a 3% discount to its closing share price of Rs 808.90 on the BSE.

The share sale translates to a stake of about 5.5% in the Mumbai developer, according to VCCircle estimates.

The transaction is uncommon as private equity-style investors typically make project-level investments in the real estate sector, though entity-level bets are not unheard of.

The deal also expands GIC’s bets in the Indian real estate sector where it is already one of the biggest private equity-style investors and runs neck and neck with PE giant Blackstone. GIC, however, has focused more on the commercial real estate segment thus far while Godrej Properties’ portfolio is tilted in favour of the residential market.

The Singapore state firm has struck at least a dozen deals in the Indian real estate sector since 2007, according to VCCEdge, the data research arm of VCCircle. It sealed its biggest deal last year when it invested $1.4 billion for a 33% stake in DLF Ltd’s rental arm. Most recently, GIC signed a preliminary pact with Prestige Estates Projects Ltd for a significant minority stake in the Bengaluru developer’s Exora Business Park.

The latest deal strengthens GIC’s presence in western India; it had picked up a majority stake in Mumbai-based publicly listed office park developer Nirlon Ltd three years ago.

After the latest transaction, GIC will have exposure to three of the five most-valued real estate companies in India—DLF, Prestige and Godrej Properties. It owns a 4.7% stake in DLF.

GIC’s newest bet comes at a time when the residential real estate segment has been going through a prolonged slowdown, hurting a number of developers. Godrej Properties, however, appears to have defied the slowdown.

On Friday, the developer said its January-March consolidated net profit more than doubled from a year earlier to Rs 141.51 crore on revenue from operations of Rs 521.2 crore. Its consolidated net profit for the year through March rose to Rs 234.96 crore from Rs 206.80 crore in the previous year. The company, which was set up in 1990 and went public with a Rs 500-crore IPO in December 2009, said in a presentation to investors that it delivered 18 million square feet of space over the past five years.

Godrej Properties is no stranger to PE investors. In 2016, it created a real estate fund management unit that raised a $275 million pool of capital with Dutch pension fund asset manager APG Asset Management NV as the lead investor.

Apart from the developer, other Godrej Group companies have also attracted PE investors. GIC’s sister firm, Temasek, has previously invested in Godrej Consumer Products and farm products firm Godrej Agrovet Ltd.

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