Warburg Pincus will invest Rs 1,800 crore ($284 million) for a minority stake in Mumbai-based real estate firm Piramal Realty, the company said on Tuesday. Piramal did not divulge the quantum of stake sale the promoters have offloaded.
The valuation of the transaction could not be immediately estimated but a minority share typically implies up to 26 per cent divestment.
This marks Warburg Pincus’ foray into the Indian real estate sector and a rare deal in which a global fund has taken an entity level position in the real estate sector. With this transaction, Piramal joins the elite club of companies, which includes the likes of Oberoi Realty and Rustomjee group that have been able to attract entity level partners.
“We will primarily use these funds as growth capital, specifically to make further land acquisitions and as working capital in some of our existing projects,” said Anand Piramal, executive director of Piramal Group. In total, Piramal Realty has projects, spanning 10 mn sqft in Worli, Kurla, Byculla, Thane and Mulund. Of this, the project at Kurla is a commercial project whereas the others are residential. Piramal will continue to focus on the market of Mumbai, where it will identify and purchase marquee parcels, Piramal added. The company did not divulge the level of debt it has accumulated. Warburg had been on the hunt to invest in the Indian real estate sector for years. “Warburg Pincus invests in companies with high growth potential and believes Piramal Realty is best positioned to achieve leadership in the market,” said Niten Malhan, co-head of India.
Piramal Realty, led by Ajay Piramal, made several high-value land acquisitions in the past four years. It acquired a land parcel from Hindustan Unilever in the heart of central Mumbai, in Worli, for Rs 452 crore. It also lapped up a 7 acre plot from Mafatlal Industries for Rs 753 crore in the Byculla area.
Recently, a number of global private equity funds have partnered with developers, including Godrej Properties, Brigade Enterprises and Nitesh Estates but in all such cases, a platform of projects has been created for the partnership. With FE & PTI