Japan’s Daiwa picks up stake in realty firm VBHC

Japanese business group Daiwa House Industry has picked up a minority stake in Jaithirth Rao-led VBHC Value Homes Pvt Ltd, signifying a growing interest in Indian real estate players among global players.

The two companies did not disclose the size of the stake and the deal value but said the proceeds would be used for expanding VBHC's portfolio. 

The developer is building 18,000 homes in Bangalore, Chennai, Mumbai and the national capital region. It has projects starting from Rs 13.68 lakh in Mumbai, Rs 25.47 lakh in Chennai and up to Rs 48.55 lakh in Bangalore.

Rao, the company's chairman and a former chairman of IT company Mphasis, said the investment by one of the largest home builders in Japan will help VBHC achieve its growth plans. A Daiwa House spokesperson said the investment is part of its strategy to expand globally.

The deal marks the Japanese conglomerate's first investment in the affordable housing segment in India. It develops residential, commercial and institutional buildings, smart towns, rental housing, stores, logistics facilities and eco-friendly buildings in its home country.

The development comes soon after VBHC received a second round of investment, of $20 million (Rs 128 crore), from global investment firm Stichting Van Herk Investments. The developer has also raised funding from HDFC, IFC, Carlyle and Caspian Advisors.

Global investors have started taking riskier bets on the Indian real estate market to tap into he long-term growth prospects of the economy. Deal activity at the entity level has gained momentum with large global investors backing real estate firms. 

GIC, which has substantially upped its activities in the real estate sector, recently invested Rs 160 crore to hike its stake in listed developer Prestige Estate Projects. Piramal Realty, the real estate arm of Piramal Group, recently got Rs 1,800 crore and Rs 900 crore from Warburg Pincus and Goldman Sachs, respectively, at the holding level.

Listed realtors have seen money coming in from institutional investors and sector-agnostic PE funds, too. For instance, Goldman Sachs and Creador invested Rs 100 crore each to take stakes in Ashiana Housing early this year. A lot of offshore developers are also showing interest to partner local players through investments or joint ventures.

Equirus Capital Pvt Ltd acted as the advisor on the transaction for VBHC.

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