Bangalore: L&T Urban Infrastructure Ltd, a unit of L&T Infrastructure Development Projects Ltd (L&T-IDPL), has bought back the 10% stake of HDFC Property Fund in the company. The fund, which had invested Rs 87 crore in 2006, has exited at Rs 122 crore.
The buyout is part of a consolidation exercise, said a spokesperson of L&T Infrastructure Development’s parent company Larsen and Toubro Ltd (L&T) in an email response. “Realty is a new business and the company is in the process of consolidating the various pieces under a single entity.”
Photo Courtesy: Bloomberg
Another subsidiary, L&T Realty, will now manage the various real estate businesses of L&T.
L&T Urban Infrastructure is developing nine projects in Bangalore, Kolkata, Hyderabad, Chennai, Visakhapatnam and Vijayawada. These projects are in various stages of development and some are already leased out, said a person familiar with the development, requesting anonymity.
Besides taking over the projects of group entities such as L&T Urban Infrastructure, L&T Realty is also executing large mixed-development projects in Navi Mumbai.
HDFC Property Fund, the real estate-focused private equity fund of Housing Development Finance Corporation Ltd, has exited without making substantial returns compared to its other exits, that have been more profitable, said the person familiar with the development cited earlier. “The real estate portfolio under L&T didn’t really take off the way it was expected to,” this person said.
The fund invested Rs 209 crore in Manyata Tech Park, Bangalore, in 2006 and exited at Rs 544 crore in 2011. In Embassy Golf Links, another Bangalore business park, it invested Rs 53 crore in 2006 and exited at Rs 201 crore this year.
“While exits will continue to happen in the sector, investments made in 2005-06 are likely to see exits with better returns than those made in 2007, when the valuations saw a rise,” said Kaustuv Roy, executive director, India, Cushman and Wakefield, a property advisory.
PE exits in the real estate sector in 2011 so far amount to $326.74 million across eight deals, according to VCC Edge, a database on PE investments in India. In 2010, there were eight exits worth $1,182.57 million.