Bangalore: Equinox Realty and Infrastructure Pvt. Ltd, promoted by the Essar group, plans to partner with private equity (PE) funds for its projects that involve a mix of residential, office, and retail space development.
Equinox has invested around Rs 1,200 crore so far in office space projects in Mumbai and Bangalore, and will invest another Rs 2,800 crore in its ongoing projects and to buy land. The company will raise the money through debt and internal accruals.
Bringing a PE fund onboard for specific projects through special purpose vehicles (SPVs), companies set up specifically for individual projects, is not so much for the capital but for their experience and expertise, said Cherag Ramakrishnan, chief executive officer, Equinox Realty.
“The idea is to get a fund as a strategic partner, (that) has a big global portfolio and will bring (to) the table its experience in asset management...which will be important for the mixed-development projects that we are planning.”
Global PE funds such as the Blackstone Group, Government of Singapore Investment Corporation Pte Ltd (GIC) and JP Morgan Funds (Asia) Ltd have invested significantly in real estate, though property analysts say that they are mostly passive, their involvement largely restricted to managing the deployment of funds, while planning and execution aspects are left to the specific developer involved.
Most of these funds such as Blackstone have followed a similar model while investing in Indian real estate projects as well, said Amit Goenka, national director, capital transactions, Knight Frank India.
The foundation of Equinox’s commercial residential development plans comprise the 4,500 homes it is building for Essar group companies, mostly in Gujarat, Madhya Pradesh and Jharkhand.
“We don’t want to be a pan-India player and the strategy is to do largely residential projects in four to five large, tier I property markets and look at markets such as Chennai, Gurgaon and even Ahmedabad subject to bandwidth,” Ramakrishnan said. “We don’t want to experiment with smaller markets.”
The company is currently developing 14 million sq. ft of real estate.
As with Piramal Realty (promoted by Ajay Piramal) and Godrej Properties Ltd, Equinox is a realty firm with the backing of a large corporate group, and this, analysts said, could cut both ways.
“The big advantage is that, being part of a large corporate group, funding issues are largely taken care of,” said Ambar Maheshwari, managing director, corporate finance, Jones Lang LaSalle India, a property advisory. He added that because these companies were not traditional “developers”, they may not be able to “maximize returns” the way a developer usually would.
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