Cafe Coffee Day (CCD) founder V.G. Siddhartha has deferred plans to sell his real estate venture Tanglin Developments Ltd to New York-based private equity giant Blackstone Group Lp for an estimated ₹2,700-2,800 crore, three people familiar with the developments said.
The decision follows Siddhartha garnering about ₹3,200 crore by selling the 20.32% stake held by him and two CCD affiliate firms (Coffee Day Enterprises Ltd and Coffee Day Trading Ltd) in software services company Mindtree Ltd to Larsen and Toubro Ltd (L&T) in March.
The deal helped Siddhartha repay his debt of about ₹2,900 crore, vastly improving his financial condition.
“Siddhartha was in desperate need to raise capital, but after the stake sale happened, he is not actively looking to sell the real estate asset for now. While he still needs to raise more capital, the transaction has been put on hold for now," said the first of the three people cited earlier, all of whom spoke on condition of anonymity.
Blackstone, along with Bengaluru-based developer Salarpuria Sattva Group, was in advanced talks with Siddhartha to buy the information technology (IT) park Global Village Tech Park, located on a 120-acre campus on Mysore Road, near Bengaluru. The property is owned by Tanglin Developments, and Siddhartha had planned to use its sale proceeds to reduce his debt.
Besides the IT park, which occupies less than half the campus area, there is scope for additional development of another 4-5 million sq. ft, said the three people cited earlier.
Global Village has among its tenants companies such as Accenture Plc and Mphasis Ltd. It is also the headquarters of Mindtree.
After buying Siddhartha’s stake in Mindtree, L&T acquired more shares of the Bengaluru-based company from the open market to raise its holding to 28.90% and subsequently launched a planned open offer for an additional 31% stake in Mindtree from public shareholders at ₹980 a share, Mint reported on 20 June. L&T has been gaining control of Mindtree despite resistance from the four founder promoters of the software services firm, and currently holds around 32% stake.
“The Global Village asset and the tenant profile are of high quality and the office park generates securitized rentals. Maybe sometime in the future, there could be a strategic partner who can come on board to develop the remaining portion, but as of now, there is no need to sell the asset in a hurry," said the second person cited earlier.
Spokespersons for Blackstone and Salarpuria Sattva Group declined to comment.
Siddhartha didn’t respond to emailed queries.
Blackstone has been acquiring commercial real estate assets in India to capitalize on growing demand in this sector. Earlier this month, the private equity firm acquired One BKC, a prestigious office building in Mumbai’s business district Bandra Kurla Complex (BKC), for ₹2,500 crore. It is also working on buying out Adani Realty’s 800,000 sq. ft commercial project, Inspire, for around ₹1,900 crore in the same area.
So far, Blackstone has invested $5.4 billion across 33 investments in India’s real estate sector (excluding the One BKC deal). Of this, $4 billion has been invested in office assets.