Bangalore/New Delhi: Construction firm Shapoorji Pallonji and Co. Ltd is setting up a real estate fund that may participate in developments worth at least $2 billion (Rs9,020 crore) in the next few years, according to people familiar with the development.
As part of the move, Rajesh Agarwal, who spearheaded AIG Global Real Estate in India as its managing director, is joining Shapoorji Pallonji, said the people, who declined to be named. Agarwal is set to formally join the group on Thursday.
The fund is likely to pursue investments in which it will have control over development rights. More details on the fund were not immediately available, but the people did not rule out the possibility of it being a proprietary play akin to Wipro Ltd chairman Azim Premji’s private equity vehicle, Premji Invest.
Shapoorji Pallonji has land banks across the country, which will be primed for development as the economic recovery gathers momentum. “Such a fund can come up with a good asset base considering that it will leverage on the group’s execution skills,” said one of the people.
A top private equity executive, who also didn’t want to be named, said he was aware that Shapoorji Pallonji has been working on a business plan related to real estate, but had no knowledge of the details.
The group did not respond to an email query. Calls and messages to Agarwal failed to elicit any response.
While construction firms turning developers is not new in India, one of them planning a large real estate fund could set a precedent. Shapoorji Pallonji’s move comes at a time when the property market is beginning to gather momentum and real estate funds prepare to prospect for potential investments after lying low during the economic downturn. Some debt-laden developers are hitting the market to sell off revenue generating assets, throwing up opportunities for acquisitions of real estate assets for less leveraged entities.
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