Bangalore: HDFC India Real Estate Fund International Llc, the overseas real estate-focused private equity (PE) fund of Housing Development Finance Corp. Ltd (HDFC), is investing $90 million (around Rs 440 crore) in an information technology (IT) park coming up in Bangalore.
The $800 million fund will pick up a stake of about 40% in the 200-acre project being planned near the Bangalore airport, said two people familiar with the development.
Embassy Property Developments Ltd, a city-based builder, will develop the project.
“It is a long-drawn, nine-year project, which will primarily have IT along with some residential space, and will throw up nearly 25 million sq. ft of development,” said one of the two people cited above. “The plan is to get many large IT companies to set up offices here and repeat what was successfully done at Manyata Tech Park, for example.” Embassy Property didn’t respond to an email query sent on Thursday.
The company had filed last year for a Rs 2,400 crore initial public offering, but has not gone to the market yet. Real estate analysts blamed this on market volatility, which has forced other property firms as well to hold back listing plans.
PE funds and developers have in the past year focused more on residential projects than office or retail spaces because of a lower risk quotient. But HDFC’s investments in non-residential projects have been rewarding. Its PE funds exited their investments in two earlier Embassy projects with substantial returns.
“The fund had invested Rs 209 crore in Manyata Tech Park and exited with Rs 544 crore. In the Embassy Golf Links project, it had acquired two buildings for Rs 53 crore and exited with Rs 201 crore,” said the second person mentioned earlier.
“Though there are challenges involved in non-residential projects like finding the right location, partner and product to begin with, large investments in this space also offer great opportunities with potential of good returns,” said Ambar Maheshwari, managing director, corporate finance, Jones Lang La Salle India, a property advisory. Like in this case of HDFC and Embassy, the comfort factor between the fund and the developer plays an important role in facilitating repeat investments, he said.
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