|Ajay Piramal may exit real estate PE fund
|Arijit Barman, Raghavendra Kamath & P B Jayakumar / MumbaiSeptember 14, 2010, 1:31 IST
Denies move; sources say IL&FS, Blackstone approached.
After selling off his domestic formulations business and diagnostic centers in quick succession this year, Ajay Piramal is now planning to exit his real estate private equity and asset management company, Indiareit Fund Advisors (Pvt) Ltd, said two independent sources.
Indiareit Fund Advisors, which began in 2006, currently has close to $1 billion (Rs 4,700 crore) of assets under management (AUM) including a new fund, Indiareit Domestic Fund Scheme IV, being raised and the recently acquired portfolio of Trikona Trinity, an AIM-listed India-focused fund.
Indiareit is promoted by Piramal Enterprises and is led by ex-entrepreneur Ramesh Jogani, who also has a minority stake. It has over the years raised third-party money from domestic and offshore investors, with Piramal as anchor investor.
Indiareitâs promoters, however, denied any move on an exit. âThe information is not correct,â said Jogani, the managing director.
âThe information is not true. I am not planning to exit from Indiareit and its asset management business. We have just raised Rs 900 crore in a very difficult market situation and the company is in a good growth trajectory,â said Ajay Piramal, chairman of the Piramal Group when asked by BS.
Excluding Trikonaâs portfolio, Indiareit alone manages over 40 million sq ft of saleable area across five Indian cities. Indiareit recently grabbed the headlines when it paid Rs 600 crore to regain control of Crossroads Mall, now known as SOBO Central from Kishore Biyani, promoter of Future Group.
This move is seen as a part of an overall shakeout in the private equity (PE) industry in India, where over 500 funds jostle for good stories to invest in.
Investment banking and PE industry sources say itâs still early days for a deal and preliminary discussions have taken place with a couple of funds as part of a valuation seeking exercise. These sources add, IL&FS Investment Managers (IIML) and Blackstone Indiaâs real estate fund have been approached by Indiareitâs promoters for a possible buyout. Itâs believed the promoters are looking at a $50 million valuation, five per cent of the total AUM.
Recently, IIML acquired Saffron Asset Advisors Pvt Ltd, a $440 million (Rs 2,050 crore) real estate-focused PE fund, making it Indiaâs largest PE firm.
Global PE giant Blackstone, too, is in advanced negotiations to take over the management of the Asian real estate investments of Bank of America-Merrill Lynchâs high-profile Asian Real Estate Opportunities Fund, whose portfolio, including debt, is pegged at $3.5 billion.
IIML officials could not be asked for comments, despite several attempts.
Real estate industry sources say Piramal is keen to concentrate on his realty development business â Piramal Suntek Realty, a JV between Ajay Piramal Group and Sunteck Realty.
In 2008, the developer via its unit, Starlight Systems, had bought two residential plots with a developable area of 7,050 sq metres each in the Bandra Kurla Complex from the regional development authority. But the project got embroiled in controversy over payment of pending dues.
Indiareit currently manages one offshore fund, of $200 million, which has 3i Group Plc as the anchor investor. Indiareit also manages two other domestic funds â Indiareit Domestic Fund Scheme I with a corpus of Rs 430 crore and the Rs 537 crore-Indiareit Domestic Fund Scheme III.
It is also raising another local fund of Rs 750 crore called Indiareit Domestic Fund Scheme IV, with a greenshoe option of Rs 250 crore. Fund raising, however, has not been easy, taking close to a year.
Indiareitâs portfolio spanning the three different funds includes IT Parks in Chennai, a 1.41 million sq ft commercial complex in Kurla, 10 residential projects totalling a saleable area of 2.5 million sq ft spread across the southern cities of Bangalore, Chennai, Kochi and Mangalore. Its flagship, say sources, is the Hindewadi SEZ project in Pune, where a 138-acre land parcel will get converted into an SEZ and an integrated township.
Trikonaâs Trinityâs portfolio, which Indiareit manages, includes Luxor Cyber City, Uppal IT Park, a slum rehabilitation project in Worli Mumbai. It also included investments in DB Realty, Phoenix Mills and Pipavav Shipyard.
The above article lists IndiaReit Fund Advisors as beloging to Piramal enterprises back in Sep 2010. So is it the same one which Piramal bought for Piramal Healthcare?
an announcement on bse on 6 may states the following:
Piramal Healthcare Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 06, 2011, inter alia, has taken the following decisions :
1. The Board has for some time, been deliberating on new business opportunities. One of the business opportunities which were being explored in this regard was in the area of Financial Services. At its meeting held on May 06, 2011, during the continued deliberations on Financial Services as a new business opportunity, it was decided to venture into the Financial Services sector. In this regard, the Board approved the following proposals:
(a) Acquisition of the Indiareit Fund Advisors Pvt. Ltd., who are Advisors to the indiareit Fund, for a total consideration of Rs. 110 crores. The Indiareit Fund is a Real Estate Private Equity Fund focused on the Indian market. At present, the total funds under management is about Rs. 1950 crores;
(b) Acquisition of the Indiareit Investment Management Company, Mauritius, who are Managers to Real Estate Private Equity Funds investing in India through the FDI route, for a total consideration equivalent to Rs. 115 crores. Total funds under management is currently about US$ 430 million;
So probably markets did not like the company taking over another company being owned by the promoter himself. And if you look at the price slide, it began right from 6th may from a level of around 458 to current levels of 358.
And while looking at Piramal Healthcare, I would ask myself a question whether I would buy a Shilpa Medicare at around 240, or Sanghvi Movers at 118 or IDFC at around 119 with a view of around 2-3 years?
Buying Piramal Healthcare is like betting on the acumen and honesty of Mr Piramal. Why not bet on ourselves to pick up good businesses at bargain prices.