Indiabulls Real Estate buys out Farallon’s stake in seven projects for $187M

Indiabulls Real Estate Ltd (IBREL), the Mumbai-based public listed realtor, has bought out the entire stake held by US-based investment fund Farallon Capital in a string of seven projects spread across Gurgaon, Sonepat and Chennai for a total consideration of Rs 1,172 crore ($187 million).

FIM, an investment entity of hedge fund Farallon Capital, held 49 per cent equity stake in these joint ventures and had invested Rs 847 crore to pick the stakes between 2006 and 2008.

Although it has exited with 38 per cent return on its principal investment amount in local currency, on repatriation it would see the value of its investment dip. According to VCCircle estimates, it had put in around $190-200 million to buy the stake and has exited its over five-year-old investment at a marginal loss given the depreciation of rupee since then.

Farallon has previously invested in various Indiabulls Group firms and is currently the single-largest institutional shareholder in Indiabulls Power.

With the purchase of Farallon’s stake, these projects will now be 100 per cent owned by IBREL.

Companies under which these projects are housed are building residential apartments and commercial projects spread over 120 acres in Gurgaon, a 160-acre integrated township in Sonepat and a 16-acre residential project in Chennai.

The company’s scrip rose to Rs 58.3 per share, up 2.2 per cent in mid-day trades on the BSE in a weak Mumbai market on Monday.

IBREL’s revenue for the first quarter of this financial year stood at Rs 508.33 crore compared with Rs 214.67 crore in the corresponding period last year, up 137 per cent. Its profit after tax stood at Rs 72.6 crore for Q1 FY14 compared with Rs 37.7 crore in the year-ago period.

IBREL is developing 73 million sq ft of land across Mumbai, Delhi NCR and Chennai. Its commercial office property Indiabulls Finance Centre recently signed up HSBC for 70,000 sq ft of office space.

Last week, another group firm Indiabulls Housing Finance Ltd had acquired the entire 42.5 per cent holding of Amaprop Ltd in its subsidiary, Indiabulls Finance Company Pvt Ltd for $42.5 million. Amaprop, a US-based private equity firm, had invested around Rs 131 crore ($30 million back then) in Indiabulls Finance in 2005.

This means it encashed around 2x in Indian currency in its eight-year-old investment though on repatriation its returns would translate into 41 per cent gains in US dollar terms.

(Edited by Joby Puthuparampil Johnson)

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