Godrej Properties looking for PE partner - report
Godrej Properties is reportedly looking to exit up to 49% of a commercial realty project in Mumbai to a private equity investor by March as part of a capital-raising initiative.
Executive Director Pirojsha Godrej told The Wall Street Journal that the firm could sell up to 49% of a project that is being developed with India's Jet Airway. He did not disclose a specific stake size or a price.
The 2.4-acre project is set to become Jet's headquarters, and the company will take out an 80-year lease. Godrej Properties will adopt the INR3.60 billion ($73 million) debt Jet has on the property, and pay Jet INR1.35 billion in compensation for expenses already incurred, the newspaper added.
On the whole, Godrej Properties had INR11.52 billion innet debt as of the end of September. This translates to a debt-to-equity ratio of 1.22, compared to 0.64 last year.
According to property consultancy Knight Frank, Indian property developers will borrow about $1 billion from private equity funds this fiscal year as banks cut back on lending. Private equity has risen to the challenge by providing INR12 billion in property funding in the three months ending in September. Knight Frank expects it to reach INR35 billion by end March 2012.
Developers have increasingly looked to private sources for funding due to a slowdown in sales and a consequent tightening of lending conditions by banks and finance companies. In addition, India's central bank raised interest rates 11 times since March 2010, in a bid to rein in inflation.
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