Tata Capital invests $80M in Shriram Properties, realtor eyes IPO in near future

Tata Opportunities Fund, a private equity fund managed by Tata Capital, has invested $80 million (around Rs 468 crore) in South India-based realty firm Shriram Properties.

The investment comes months after Shriram Properties said it is looking to raise Rs 1,000-1,200 crore from private equity funds and a rare deal at the entity level of a realty firm. Entity level investments used to be made in the boom period of 2005-08 but now most PE deals in the sector are being routed through project level SPVs.

However, the Chennai headquartered realtor has raised capital both at company holding and SPV level. Funds including TPG, Sun Apollo and Walton Street have invested in the developer at the enterprise level. 

"We believe that the residential real estate market, particularly mid-market housing, should see high growth on the back of increasing urbanisation, changing demographics and an upturn in the economy," said Padmanabh Sinha, managing partner, Tata Opportunities Fund.

He added that the sector agnostic fund is actively pursuing investments in other such companies.

As part of the latest investment it gets a board seat on Shriram Properties.

M Murali, managing director, Shriram Properties, said, “The investment would help the company begin its next phase of growth and also position it favourably for an initial public offering in the near future.”

Sprout Capital advised Shriram Properties on the transaction.

Shriram Properties, a part of the Rs 90,000-crore Shriram Group, is present across Bangalore, Chennai, Coimbatore, Kolkata, Visakhapatnam and Hyderabad and has over 50 million square feet under development.

Its other financial partners include TPG, Walton Street Capital, Starwood Capital, ASK Real Estate, Prudential ICICI, Sun Apollo and Amplus.

In a recent interaction with VCCircle, Murali had said that the company is looking to buy 15 million sq ft in Chennai, Bangalore and Hyderabad. Sources also indicate that it recently bought land measuring 300 acres in South India.

The Tata Opportunities Fund (TOF) is a third-party private equity fund which invests in select Tata group entities as well as other independent Indian businesses. It is one of the string of PE funds under Tata Capital.

Tata Capital manages private equity and venture capital funds with cumulative assets under management of approximately $1 billion. Its five funds include Tata Capital Growth Fund, Tata Capital Healthcare Fund, Tata Capital Innovations Fund, Tata Capital Special Situations Fund - Trust and Tata Opportunities Fund.

For TOF, this is the second deal this year and also the second investment in a firm outside the Tata Group. It has backed firms like Tata Sky, TRIL and Roots Corp in the past. Early this year it had invested $50 million in Varroc Engineering its first deal outside the Tata Group.

(Edited by Joby Puthuparampil Johnson)

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