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RMZ buys back stakes from QIA, Baring Private Equity India

16 April, 2018

The promoters of Bengaluru developer RMZ Corp have bought back the stakes held by Qatar Investment Authority (QIA) and Baring Private Equity Partners India in a unit, marking one of the biggest exits for private investors in India’s real estate sector in recent times.

The promoters Raj and Manoj Menda bought back the 45% stake in RMZ Infotech through a combination of internal accruals and bank financing, two people familiar with the matter told VCCircle. The deal value is close to $1 billion (Rs 6,500 crore), they said.

One person said that the deal had been in the making for some months and that the company had even explored a secondary transaction with a slew of potential investors before sealing this agreement.

RMZ Infotech is the developer’s commercial arm and houses office parks. The promoter Menda family will now fully own the unit.

The second person said the deal lets the promoters consolidate their shareholding in the company before they hit the public markets. “This deal could be a step towards their listing plans in future,” he said, adding that the listing of a real estate investment trust (REIT) has been on the cards for some time.

The Times of India reported the development earlier in the day. The report said that the investors clocked returns to the tune of 250-300% on their investments. VCCircle couldn’t verify this.

The development marks a key exit deal in the Indian real estate private equity space. A lot of capital has flown into the sector over the years, especially at the entity level across both commercial and residential segments, but exit transactions have been few and far between.

In another exit deal in Bengaluru in recent months, Prestige Estates Projects bought back the stake of Capital Land in six retail assets for roughly 324 crore.

The RMZ deal comes at a time when the commercial real estate segment is going through a strong phase. A lot of global investment firms, especially sovereign and pension funds, have ramped up their focus on the commercial real estate market in India. While the overall market sentiment has been weak, the commercial segment has remained a bright spot, given the momentum on leasing and declining levels of vacancy.

Last year, in one of the biggest transactions in the real estate sector in the country, the promoter group of DLF Ltd sealed an agreement with Singapore sovereign fund GIC to divest a 40% stake in its rental arm. The deal is valued around Rs 18,000 crore.

Mumbai-based K Raheja Group struck a deal with real estate giant Blackstone for selling its rent-yielding assets last year. Canadian pension fund CPPIB, which has been aggressive on its real estate investments in India, last year struck two platform deals—with The Phoenix Group and IndoSpace—for retail and warehousing assets, respectively.

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RMZ buys back stakes from QIA, Baring Private Equity India

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