Mumbai: The Chatterjee Group (TCG), promoted by non-resident investor Purnendu Chatterjee, is in talks to buy out Vornado Realty Trust, the strategic partner in its Indian real estate business, said two people aware of the development.
Vornado is a real estate investment trust (REIT) based in the US with investments in commercial and retail properties. TCG’s Indian real estate business includes TCG Real Estate and an offshore investment platform—India Property Fund—which it started in partnership with Vornado.
TCG is active across sectors such as petrochemicals, software, life sciences, real estate, financial and information technology services.
“TCG has been in talks for a while with Vornado to buy out the latter’s stake in their joint investments in Indian commercial real estate properties. The transaction is expected to be closed soon and is likely to be worth several hundred million dollars," said one of the two persons cited above, requesting anonymity as he is not authorized to speak with the media.
The group has commercial real estate properties across six cities in India—Mumbai, Delhi NCR, Kolkata, Pune, Bengaluru and Chennai.
“The book size of the TCG Real Estate business is around Rs7,000 crore. TCG had brought in Vornado to leverage on its technical knowledge of REITs. Unlike other developers in India who owned the land, constructed projects and then tried to sell them and got stuck with unsold inventory or land banks, a REIT is more of financial engineering where somebody else owns the land, somebody else owns the building, and somebody else is responsible for sale," said the second person cited above, also requesting anonymity.
Vornado is the largest REIT company in the US and that technical know-how is something that TCG has acquired through the partnership over the years and it now feels comfortable to go ahead independently, he added.
An email sent to TCG did not elicit any response. Vornado declined to comment on the development.
Apart from the real estate business, TCG has also been actively weighing strategic decisions in its other businesses in India.
In April, Mint reported that the group was in discussions with Indorama Ventures Public Co. Ltd, the Bangkok-based chemicals maker controlled by the Lohia family, for a stake sale in Haldia Petrochemicals.
TCG owns close to 48% in Haldia Petrochemicals, while the West Bengal government owns close to 31% stake.
In October, Mint reported that TCG had shown interest in acquiring a stake, along with change in management control, in JBF Industries Ltd, a Mumbai-based polyester maker.
The talks are being helmed by private equity fund KKR, which owns close to 20% in the company along with a part of the company’s debt, Mint reported. Other parties, which had shown interest in the asset included the Indorama group and Reliance Industries Ltd. Of the three suitors, Indorama and TCG had started the due diligence process on the company, Mint reported.