BackDLF, Blackstone realign shareholding deal
Blackstone gets to keep two land assets in Bengaluru and one in Chennai, and the other fourone in Kochi and Indore each, two in Chennairemain with DLF
PremiumPhoto: Pradeep Gaur/Mint
Bengaluru: Realty firm DLF Ltd and global investor Blackstone Group LP have arrived at a mutual decision to divide the shareholding agreement for the seven properties the two partners own across Chennai, Bengaluru, Kochi and Indore, after more than a year of negotiations.
Blackstone gets to keep two land assets in Bengaluru and one in Chennai, and the other four—two in Chennai and one each in Kochi and Indore—remain with DLF, said two people familiar with the deal.
“…Given the current strategy coupled with market conditions, DLF is currently focused on select projects in certain micro markets. Accordingly, it has been jointly decided by DLF and the Investor to realign the current shareholding arrangement in the JV companies in order to maintain continued focus of future development of various projects," DLF said in a notice to the BSE on Wednesday.
In 2007, DLF sold a 49% stake in these projects to Merrill Lynch & Co. for ₹ 1,481 crore. The middle-income housing projects would get fully developed in about seven to eight years, DLF had said then.
At the peak of the global financial crisis in 2008, Bank of America Corp. (BofA) acquired Merrill Lynch.
In 2010, Blackstone, the largest owner of commercial real estate in India, entered into an agreement to manage Bank of America Merrill Lynch’s Asian real estate assets and to act as the new general partner for the Merrill Lynch Asian Real Estate Opportunity Fund.
In the process, it also started managing BofA Merrill Lynch’s assets in India, where the latter owned stakes in several DLF projects.
Though DLF has partially launched and developed some of these land parcels since 2007, some of them remain undeveloped. With Merrill Lynch’s 2007 fund’s life coming to an end, Blackstone has been trying to sell some of them to generate returns.
“Each of us will be responsible for a certain property and also to customers in projects that are already developed," said a DLF spokesperson.
Blackstone didn’t respond to an email query.
Of the seven, Blackstone gets the land parcels in Begur Road (47 acres) and Jigani (60 acres) in Bengaluru and one on Old Mahabalipuram Road in Chennai.
Blackstone has invested more than $6 billion across real estate and private equity transactions in the past decade or so. It has about 50 million sq. feet of office area, spanning 16 assets in five cities in India.
“Blackstone had started to negotiate with developers last year to sell their Bangalore land parcels. But since DLF and Blackstone couldn’t arrive at a decision themselves on the shareholding, those sale transactions were put on hold. Now, with more some clarity on this, hopefully those will be restarted," said a person familiar with the development who did not wish to be named.
In the past year, Blackstone was in talks with Salarpuria Sattva Group in Bengaluru to sell the Jigani land. It has been in talks with city-based developer Ozone Group to sell the Begur land. Both the transactions weren’t concluded.
The settlement will give Blackstone a free hand now to negotiate and sell the land parcels to developers and also let DLF to continue with the other projects or decide what it wants to do with them.
On Wednesday, DLF shares gained 3.68% to close at ₹ 157.70 on the BSE, while India’s benchmark Sensex index rose 0.46% to 27,915.89 points.
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