Piramal Fund Management, the real estate investment platform of Piramal Enterprises, has signed an agreement to exit its almost four-year-old investment in a project of Mumbai-based developer Omkar Realtors, it said on Wednesday.
The firm had invested Rs 200 crore in a luxury residential project christened ‘Omkar 1973’ in 2011. The deal was sealed through a domestic fund – Indiareit Domestic Scheme IV.
The investment firm did not share whether the exit involves a buyback of stake by the developer, as is common for realty deals, or a secondary transaction where another investor will acquire the stake. However, it shared that it has clocked an internal rate of return (IRR) of 24 per cent on the investment.
Khushru Jijina, managing director, Piramal Fund Management, said, “From our investors’ perspective, exits are perhaps the most visible and important aspect of the investment life cycle and we are pleased to be validating the performance of Scheme IV at this early juncture.”
He said including the exit from the Worli project, the firm will be returning a large quantum of the initial corpus with attractive returns.
Domestic Scheme IV was raised in June 2010 with a total corpus of Rs 922 crore. The portfolio of the fund had eight investments and it has given Rs 106 crore back to its Limited Partners (LPs) from three partial exits. The stake sale in Omkar’s project marks the first full and fourth divestment under Scheme IV.
The company said investors can expect one more full exit and another partial exit within the next quarter which will be announced in due course. “With all of the above exit proceeds being distributed Domestic Scheme IV will have returned more than 75 per cent of the fund corpus by December 2015,” it said.
Omkar has been a long-term partner of Piramal and it has sealed multiple deals over the years. Recently, the PE firm deployed Rs 1,200 crore in the same project (Omkar 1973) of the developer in the form of debt. This is one of the biggest transactions in real estate in recent times.
The fund house also has exposure to Omkar’s Malad project Alta Monte through an apartment bulk buying structure.
The developer has over 20 million sq ft under various stages of development in Mumbai across residential and commercial spaces.