HDFC Property Fund, the real estate investment unit of HDFC Group, has sold majority of its stake in engineering, procurement & construction (EPC) and realty firm Vascon Engineers Ltd though off-market transactions, incurring a huge loss on its nine-year-old investment.
HDFC Property Fund had initially invested around Rs 138 crore in the company in June-August 2006 for just under 15 per cent stake. Later it participated in a rights issue and is estimated to have invested around Rs 150-152 crore in total in Vascon.
It held on to its stake after Vascon went public in February 2010.
The property fund, which invests in residential properties across major cities in India, owned 12.83 per cent and has now sold 10.4 per cent equity stake in the realty firm in two tranches early this week via off-market transactions.
Given the market price, the realty fund is estimated to have pocketed just about Rs 14 crore in the process.
Following the stake sale, the fund now owns 2.44 per cent stake in Vascon Engineers, which is worth Rs 3.3 crore.
It has lost close to 90 per cent of its investment value in the listed construction firm, as per VCCircle estimates.
A spokesperson for the fund house told VCCircle that EPC firms have been hit by the market and business slowdown and Vascon is one of its only investment where it has to exit at a loss and the only such portfolio firm in the listed space. He added that the tenure of HDFC Property Fund has ended and so it has offloaded its stake proportionately to its own investors.
Vascon is in the process of floating a rights issue to its shareholders and the investors of HDFC Property Fund who have got direct holding in the company will now get to participate in the issue.
Pune-based Vascon Engineers, founded by R Vasudevan in 1986, has presence in EPC and real estate development. Under the realty segment, it has developed residential, commercial, malls and hotel projects in Pune, Nashik, Hyderabad, Chennai and Coimbatore, etc. It is active in multiple sectors including residential, industrial, IT parks, malls and multiplexes, hospitality and community.
Vascon Engineers currently has a market capitalisation of just Rs 137 crore.
Other investments by HDFC Property Fund include Manyata Embassy Business Park, Metrozone, L&T Urban Infrastructure Ltd, Paranjape Schemes Construction Ltd, Sterling Villa Grande and Godrej Waterside.