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Business News/ Companies / Milestone to exit Milestone Bullion Series I by October
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Milestone to exit Milestone Bullion Series I by October

Private equity firm to divest fully its `330 crore corpus raised in 2010 to invest in gold and silver-linked debentures

With this exit, Milestone Capital would have seven pure real estate-focused funds; it had exited its other non-real estate businesses earlier.Premium
With this exit, Milestone Capital would have seven pure real estate-focused funds; it had exited its other non-real estate businesses earlier.

Bangalore: Private equity firm Milestone Capital Advisors Ltd is going to divest fully its Milestone Bullion Series I—a 330 crore corpus raised in 2010 to invest in gold and silver-linked debentures—by October.

With this exit, Milestone Capital would have seven pure real estate-focused funds; it had exited its other non-real estate businesses earlier.

The Bullion Series was launched by Milestone to give investors an opportunity to achieve portfolio diversification via investments into debentures directly linked to physical gold and silver.

“More than 70% of the original investments have already been liquidated at 1.42x (1.42 times) and the remaining are scheduled for liquidation by October 2014. Bullion markets, in the meanwhile, have remained jittery with continuous shifts in the global economic environment. The metal prices have been treading in bearish territory at large since their rise to historic highs," Milestone Capital said in an emailed response.

The exit from the Bullion Series entails sales of this stock to an end-user (typically a large bullion trader) or an intermediate buyer in the market. “Once we have fully exited the gold fund, generating around 12-15% returns, our focus will be on exits from the real estate funds and on our fund-raising," said Rubi Arya, director and vice-chairman, Milestone Capital.

Milestone Capital has been focusing on its non-real estate divestments apart from its core realty business. In 2013, it sold Ecofirst Advisory Services, the engineering consultancy business, for an undisclosed amount to Tata Consulting Engineers Ltd. Later, Quadria Capital Investment Advisors, an Asia-focused healthcare private equity fund, acquired Milestone Religare Investment Advisors Pvt. Ltd, which runs a 410 crore healthcare and education fund.

With over 3200 crore worth of assets under management across seven funds, Milestone manages investments over 25 million sq. ft of realty projects.

From its real estate funds, Arya said it plans to fully exit three of its seven funds by March 2015.

Last month, Milestone Capital exited four of its early investments—in the residential, commercial and hospitality format projects—across funds at a combined value of 132 crore.

The projects it has exited from are Grand Central Mall in Rajkot, office project Platina in Hyderabad, affordable housing projects in Puducherry and Madurai and a land investment in Nagpur.

Arya said to achieve this kind of momentum in their divestments, especially in challenging markets like Hyderabad and Rajkot, is a testimony to partner selection and ability to identify the right investment opportunities and exit at healthy valuations. “The Hyderabad divestment at a multiple of 1.53x makes us one of the few players to conclude a profitable exit from commercial investment in Hyderabad."

Milestone is finally also in fund-raising mode with a new 500 crore fund, that would invest in residential projects in prime property markets, and is evaluating real estate investment trusts (REIT) very closely as an opportunity.

With the last bit of dry powder (the capital available for investors to deploy) left, Milestone Opportunities Fund 10 is close to deploying 50 crore in Breeze, a mid-segment residential project in Gurgaon by Assotech Realty Pvt. Ltd.

The deal is modelled on structured debt with equity participation targeting a minimum internal rate of return (IRR) of 22%.

An Assotech spokesperson declined to comment.

Profitable exits in fund management are vital, as they create a sort of positive track record, which helps in instilling faith in investors, said Bhairvav Dalal, associate director, PwC India, a consultancy. On overall interest and investments in smaller cities, he said, “Lot of investors had invested in tier-II cities with the expectation of exponential growth. Today, funds are much more cautious in investing in these markets and want to primarily focus on the major cities."

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Published: 15 Sep 2014, 11:37 PM IST
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