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MBD in talks with PE funds, may sell up to 49% equity

MBD in talks with PE funds, may sell up to 49% equity
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First Published: Mon, Mar 31 2008. 12 28 AM IST
Updated: Mon, Mar 31 2008. 12 28 AM IST
New Delhi: Delhi-based publishing house MBD Group is in talks with international private equity firms to offload equity in its mixed-use development MBD Zephyr in Bangalore, as it tries to raise funds in a nervous and choppy market.
The mixed-use development, which is expected to be completed by 2011 will have a luxury hotel, space for luxury and premium retail, and entertainment spaces.
The company is looking at offloading between 26% and 49% equity in the retail portion of Zephyr, which is spread over more than 80,000 sq. ft.
“We have started sensing the market. We have been approached by some private equity funds,” said Sonica Malhotra, executive director, MBD. She did not say how much the company expected to raise from this divestment.
The eight-acre MBD Zephyr project at Whitefield near Bangalore is targeting luxury brands such as Gucci, Versace, Louis Vuitton and premium ones such as Debenhams, Zara, Mango and Body Shop. Zephyr will also have a 450-room luxury hotel owned and managed by the MBD Group.
The private equity investment will be completed after eight months once the tenant mix in Zephyr’s retail portion is finalized. “We want the tenant mix to be absolutely secure before we bring in private equity investors. As of now we just have an anchor tenant,” Malhotra said. She declined to name the anchor tenant because of a confidentiality agreement.
MBD follows other real estate developers who are looking at raising money through the private equity route as traditional sources of funding such as bank loans dry up. And in the prevailing adverse market conditions, raising funds from the capital market has also become unviable.
MBD also plans to develop four more Zephyrs in India in Delhi, Mumbai, Hyderabad and Chennai. The company has not yet decided on a time frame for the expansion. “Considering the appetite for luxury products, I think we can have up to five Zephyrs in India” Malhotra said. MBD Group is also developing a mixed-use development, MBD Neopolis in Ludhiana and Jalandhar, targeting the premium segment of the retail market.
According to PricewaterhouseCoopers, the size of the luxury market in India is around $450 million (Rs1,804.5 crore) and is growing annually at 20-25%. India’s largest developer DLF Ltd is also developing a luxury mall called DLF Emporio in New Delhi.
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First Published: Mon, Mar 31 2008. 12 28 AM IST