HDFC PE unit commits $90m to Bangalore IT park

The $800 million HDFC India Real Estate Fund International will acquire approximately 40% interest in the project, which will be developed by Embassy Property Developments, LiveMint reported, citing two people familiar with the situation.

Embassy is one of a host of real estate firms that have turned to private equity as other funding channels dry up. The company last year filed for an INR24 billion ($490 million) IPO and HDFC and Temasek Holdings were said to be in talks about a $100 million pre-IPO investment. Embassy has yet to go public. HDFC has previously invested in Embassy while Temasek holds an interest in HDFC.

Real estate consultancy Knight Frank last month projected that Indian property developers will borrow about $1 billion from private equity funds this fiscal year as banks cut back on lending. PE funding to the sector came to INR12 billion ($252 million) in the three months to September and is expected to reach INR35 billion by end March 2012. Deals are being made on the basis of internal rates of return of 25-30%.

While most private equity firms tend to target residential projects, HDFC has found success in commercial and retail investments. The company committed INR2.09 billion in Manyata Tech Park and exited with INR5.4 billion. It also realized INR2.01 billion on a INR530 million investment in two buildings that form part of the Embassy Gold Links project.

It was reported in August that HDFC would exit its stake in Manyata Promoters, which operates Manyata Tech Park, to Blackstone Group. The US private equity firm agreed to buy a 37% interest in the company for around $200 million, valuing the entire development at $550 million.

 

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• Topics
• South Asia
• Real estate
• India
• Real estate
• HDFC Private Equity
• The Blackstone Group
• Temasek Holdings