Mindspace REIT ropes in GIC, US asset managers as investors ahead of IPO
Photo Credit: VCCircle

Mindspace Business Parks REIT, a real estate investment trust sponsored by K Raheja Corp and private equity firm Blackstone, has raised Rs 1,125 crore ($150 million) from a bunch of investors ahead of its initial public offering.

The REIT allotted 40.9 million units to a handful of foreign institutional investors including Singapore sovereign wealth fund GIC Pte Ltd at Rs 275 per unit, according to the offer document.

GIC and US-based Capital Group, which is among the world’s largest investment firms, each acquired Mindspace REIT units worth Rs 450 crore.

Other investors include US asset manager Fidelity (Rs 135 crore), Singapore state firm Temasek-owned Fullerton (Rs 38.6 crore) and Singapore insurance company NTUC Income (Rs 51.4 crore).

The investors have agreed to deposit the difference between the allocation price and the offer price within two days of the determination of the REIT price band.

Mindspace is yet to publicly announce its price band for the REIT offering. The IPO will open to public investors on July 27 and close two days later.

This is the second IPO of an REIT in India. Embassy Office Parks REIT, which is also backed by Blackstone, went public last year.

Mindspace had filed its draft proposal for the IPO with the Securities and Exchange Board of India in January this year.

The REIT aims to raise Rs 4,500 crore through the IPO. This includes a fresh sale of units worth Rs 1,000 crore and an offer for sale of Rs 3,500 crore by existing unit holders including Blackstone and K Raheja group entities.

Blackstone Real Estate Partners is one of the key investors in the REIT. It had acquired a bunch of commercial real estate assets of K Raheja Corp in Mumbai, Hyderabad and Pune in 2017.

Mindspace will use the proceeds from the fresh issue of units for repaying its debt, redeeming its preference shares and for general corporate purposes.

The REIT has hired 13 bankers including Morgan Stanley India, Axis Capital, Kotak Mahindra Capital and JM Financial to manage the IPO. The other bankers are DSP Merrill Lynch, Citigroup Global Markets, ICICI Securities, HDFC Bank, Ambit Capital, UBS Securities India, Nomura Financial Advisory and Securities (India) and CLSA India.

Mindspace owns a portfolio of properties in India’s four key office markets. Its portfolio has a total leasable area of 29.5 million square feet as of March 2020. This is one of the largest Grade-A office portfolios in India.

Of the total, 23 million sq ft is completed area, 2.8 million sq ft is under construction and 3.6 million sq ft is earmarked for future development. The portfolio has five integrated business parks and five independent offices.

The portfolio has 172 tenants such as Accenture, Qualcomm, JP Morgan, Amazon, Schlumberger, UBS, Capgemini and Facebook. No single tenant contributed more than 7.7% of its gross contracted rentals as of March 2020.

The REIT clocked a net profit of Rs 513.9 crore for 2019-20 on revenue from operations of Rs 1,766 crore. Its net profit was Rs 515.4 crore for 2018-19 on revenue from operations of Rs 1,431.6 crore.

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