Bangalore: Blackstone Group Lp and Embassy Property Developments Pvt. Ltd will this month conclude their acquisition of a majority stake in Vrindavan Tech Village, a special economic zone in Bangalore, more than a year after they partnered to buy the 106-acre property, said multiple people familiar with the development.

The transaction was mired in a number of issues such as disagreements between the shareholders and liabilities linked to the asset, and required changes in the partnership and the contours of the deal.

Embassy Property, which will now develop the project, put in 450 crore and Blackstone 550 crore of equity to acquire a 60% stake in the project. The balance 40% stake remains with investor Rakesh Garg. The Vrindavan Tech Village property is valued at 1,951 crore.

Standard Chartered Bank has extended 650 crore of debt.

Vrindavan Tech Village, located on Outer Ring Road, was owned by Mithilesh Kumar Tripathi, chairman of Vikas Telecom Ltd, and other shareholders, and was being developed by Assetz Homes Pvt. Ltd. HDFC Realty Fund, an initial investor partner in the transaction, opted out of it. But the fund, which is raising overseas capital, may invest in the 18-acre residential component within the project, slated to be launched in six months, said one of the people mentioned above, who didn’t want to be named.

Jitendra Virwani, chairman and managing director, Embassy Property Developments, said the land is strategically located in an area where there is huge demand for office space. “Total liabilities on the asset was around 895 crore; that had to be paid off. We have already begun construction at the site," said Virwani.

Blackstone declined to comment on the transaction.

“The reason why it (the transaction) took so long is because the property had a number of real estate and non-real estate issues that needed to be addressed," said Anuj Nautiyal, managing director and chief executive of Redwoods Projects Pvt. Ltd, a boutique investment bank that was the adviser for the transaction. Among the various shareholders who were bought out were two Indian subsidiaries of Singapore-based Assetz Property Group—BMS Service India Pvt. Ltd and Assetz Property Services Pvt. Ltd, which had asset management contracts with Vikas Telecom in the project. They were bought out for around 100 crore.

Such large private equity transactions in real estate have shrunk, with most deals happening in the 75-200 crore range, according to property analysts. “Large deals are being structured with multiple participants and different forms of capital with a debt and equity combination, and this is probably the only way today to do such transactions," said Ambar Maheshwari, managing director, corporate finance, Jones Lang LaSalle, a property advisory.

Private equity investments in real estate in 2013 amounted to $1.13 billion across 43 transactions, compared to 57 deals worth $1.48 billion the year before, according to VCCEdge, which tracks investments. This year, till date, $84 million have been invested across 12 deals, it said.

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