Kolte-Patil in talks with global investors to set up Rs500-crore real estate platform2 min read . Updated: 02 Nov 2017, 02:42 PM IST
Kolte-Patil Developers is in discussion with global private equity firms to set up a real estate investment platform worth around Rs500 crore to fund its future projects
Mumbai: Pune-based realty firm Kolte-Patil Developers Ltd is in discussion with global private equity investors to set up a real estate investment platform worth around Rs500 crore to fund its future projects, said a top company executive.
The company is also in separate talks with private equity firms to raise another Rs150-200 crore to fund few of its existing projects, said Gopal Sarda, group chief executive officer, Kolte-Patil Developers, in an interview with Mint.
“We are discussing with a few global funds for a platform transaction where we would like to set up a line of credit of around Rs500 crore. While we will put in 20%, the rest would be contributed by the fund," he said.
The deal is expected to close in the next three-four months and the company is working on creating a strong pipeline of projects for the purpose, he said. He, however, declined to reveal the names of the private equity firms the company is in touch with. This is the first time the company is looking for such a transaction.
“We evaluated this platform model because we felt rather than creating multiple partnerships we want to have one strong partnership with an international player... It would enhance the power to get bigger land parcels and take the business development at a faster pace," Sarda said.
In 2015, the BSE-listed firm raised around Rs120 crore from Metropolitan Lifespace Real Estate Developers Pvt. Ltd, an entity managed by JP Morgan Asset Management, to jointly redevelop a housing project in Mumbai’s suburbs.
The company is looking to bring in around 4-5 million sq.ft of residential projects in the next one year, including its first affordable housing project which it is gearing to launch at Wagholi in Pune this month. It is also planning its second affordable housing project at Hinjewadi, Pune.
Sarda said the company is scouting for land parcels in Mumbai and Bengaluru for affordable housing projects though its primary focus would remain Pune.
“We expect around 30-35% of the revenue coming from affordable housing in the next three years," he said. At present, a total of 2-2.2 million sq.ft houses are sold every year. The company expects an additional sale of around 1-1.3 million sq.ft coming from affordable housing each year.
Entity-level private equity investment deals have picked up in the last few years as several global sovereign funds and private equity firms look to make long-term investment in the real estate space. A few global investment firms which have already formed such partnerships with Indian property developers include Canada Pension Plan Investment Board (CPPIB), International Finance Corporation (IFC), part of World Bank, and Standard Chartered Private Equity Ltd.
Shares of Kolte-Patil were trading at Rs255.25 apiece, up 0.73% from its previous close, while Sensex was up 0.39% at 33,344.23 points.