IL&FS Private Equity has invested Rs 200 crore ($38.5 million) to buy 9.36 per cent stake in Indiabulls Infraestate Ltd, a wholly owned special purpose vehicle (SPV) floated by Indiabulls Real Estate Ltd to develop a realty project on a parcel of land in Mumbai.
The project is being developed on 8.39 acres of land at Lower Parel Division, Mumbai, earlier occupied by Bharat Textile Mills.
In a stock market disclosure, Indiabulls Real Estate said that IL&FS Trust Company Ltd and its group of investors – namely, IIRF India Realty XXI Ltd and Little Fairy Ltd – have invested an aggregate of Rs 200 crore through subscription to equity in IBREL SPV. IL&FS PE is the country’s largest home-grown private equity firm by assets under management.
The post-issue valuation of the project is pegged at Rs 2,136 crore, which is 35 per cent more than Rs 1,580.30 crore, the price (including stamp duty) at which Indiabulls Real Estate acquired the land in August 2010 in one of the single largest real estate deals. The land was acquired from National Textile Corp. Ltd, a government-controlled firm owning large tracts of land across India comprising defunct textile mills.
Indiabulls had also acquired another tract of land close to Bharat Textile Mills, which belonged to Poddar Mills. The firm is now planning to develop the two pieces of land as a gated residential project including IT office space.
The latest deal comes as a positive sign for the firms in the real estate market who are trapped under slowing demand and crippling debt on their books in a scenario where cost of finance has shot up due to monetary tightening.
In 2011, private equity funds sealed deals worth over $1.31 billion in the real estate sector, according to VCCedge, the financial research platform of VCCircle. More than a quarter of this included investment made by global PE giant Blackstone.