IDFC Alternatives, the private equity arm of IDFC Ltd, has signed a share purchase agreement with real estate funds managed by global investment giant Blackstone for selling its entire holding in its subsidiaries Galaxy Mercantiles Limited and Neopro Technologies Private Limited, the company has disclosed.
The announcement, which came after market hours, did not disclose financial details of the transaction. This development comes weeks after IDFC announced in a market disclosure that it is looking to monetize two of its commercial real estate investments in Noida and Pune.
The assets have been sold for a total consideration of Rs 1,100 crore ($178 million) generating an internal rate of return (IRR) of 22 per cent on the investment made two-three years ago.
With this divestment, IDFC exits its proprietary India Office Fund which it had seeded with investments in two office parks at an enterprise value of approximately $150 million.
Galaxy Mercantiles Ltd owns and operates fully developed 1.36 million sq ft IT Park located at Noida in the National Capital Region. In 2011, IDFC had invested roughly Rs 400 crore in the SPV which is promoted by DLF.
Neopro Technologies Private Limited operates a 1.5 million sq ft SEZ in Hinjewadi special economic zone (SEZ) near Pune for information technology (IT) and information technology-enabled services (ITeS) firms. Back in March, 2013, IDFC invested approximately Rs 500 crore in the asset which also houses luxury residential space.
“We are focussed on growing our real estate fund management capabilities through a strategy of identifying emerging opportunities early on which has been successfully proven by the exit of this proprietary fund to a reputed international fund manager, managing multiple pools of capital and creating value through active asset management. We are in the process of identifying new opportunities in the real estate sector to generate superior risk adjusted returns and will be approaching the global investor community with a differentiated strategy shortly,” M K Sinha, managing partner and chief operating officer, IDFC Alternatives said.
The firm recently flipped its plan to raise a commercial realty focused fund and is now raising a Rs 1,000 crore fund focused on residential assets from offshore investors. It has raised a Rs 750 crore fund from domestic investors for residential assets and is currently deploying capital from the fund.
Blackstone, the world’s largest alternative investments fund manager which invests in India out of its global fund, is currently looking to raise around $16 billion for its new flagship buyout fund. It has been aggressive in picking large commercial realty assets.
Early this year it completed the buyout of Vrindavan TechVillage (VTV), a large business park in Bangalore, from three of the four stakeholders along with southern realty major Embassy Group.
The deal was routed through Embassy Office Parks, an equal equity JV between Embassy Group and Blackstone. Embassy Office Parks picked 60 per cent stake in a deal which valued the property at Rs 1,951 crore ($324 million), including debt. The park has been renamed Embassy TechVillage.
It has also expanded its exposure to Indian real estate market by investing in residential assets. It invested Rs 175 crore in a Chennai project of South India-based realtor Ozone Group.