Leading private equity firm Warburg Pincus is increasing its real estate exposure in India. The PE firm has joined hands with its existing portfolio company Lemon Tree Hotels Company Pvt Ltd for an affordable housing venture. The two firms have formed a joint venture - Oceanus Real Estate Pvt Ltd - and will invest over Rs 1,400 crore, says a PTI report.

Lemon Tree will hold 51 per cent stake in the JV while the remaining 49 per cent will be held by Warburg Pincus while both the partners will invest Rs 700 crore each in the project, the report said, quoting Lemon Tree Hotels chairman and managing director Patu Keswani.  The ‘Lemon Tree’ brand of residential apartments would be priced between Rs 20 lakh and Rs one crore per unit, he added.

This will be the second investment of Warburg Pincus in Indian real estate. In 2008, the firm had invested $75 million in Unique Affordable Homes Pvt Ltd, part of the Jaipur-based Mannat Group company.

Warburg has been very active on the non-real estate investing in India and it shot to fame by giving one of the best exits in Indian private equity by making almost 6X return over its $300 million investment in Bharti Airtel.

In 2006, Warburg had invested $45 million in the hospitality business of Lemon Tree, which owns and operates 14 mid-scale hotels in the country with a total capacity of 1,500 rooms.

According to the news report, Lemon Tree Hotels is planning to come up with a total of 20 hotels with 2,800 rooms and expects to go public. Besides domestic expansion, the company is also exploring opportunities in Nepal and Sri Lanka to set up its group of hotels. Keswani may also set up a 250-room hotel in New York in partnership with “with a friend.”

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