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Piramal Fund, Altico Cap to invest Rs 725 crore in century projects
Piramal Fund Management and Clearwater Capital's non-banking financial company Altico Capital have entered into an agreement to invest Rs 725 crore in a clutch of projects of Bengaluru based Century Real Estate.
The investment will be made through structured debt in stages over the next five years as part of the deal, which is one of the largest private equity transactions for Bengaluru's real estate market.
Of the total investment, Rs 620 crore will be structured debt while Rs 105 crore will be construction finance, executives said. Piramal Fund Management and Altico Capital will put in 50% each of the structured debt amount, while construction finance will be entirely funded by Piramal Fund Management.
"The investment is being made into a portfolio of nine projects across different locations in Bengaluru. We will have security of cash flow from these projects and have additional security in the form of land," Khushru Jijina, managing director of Piramal Fund Management told ET.
An email query sent to Clearwater Capital remained unanswered till late evening on Thursday.
Part of the funds raised will be used by Century Real Estate to support Kotak Realty Fund's exit valued at Rs 375 crore from its portfolio of three projects. Kotak Realty had invested Rs 170 crore in these projects through its funds in 2011 and has managed to get over 20% internal rate of return for its investment.
The three projects in the portfolio include a joint development project with Salarpuria Group, while the other two are completely owned by Century Real Estate.
"We have made an exit from Century's portfolio of three projects we had invested in 2011. The partnership has proved fruitful as the investments have provided us over 20% IRR," said Vikas Chimakurthy, director at Kotak Realty Fund. Century Real Estate Holding's managing director Ravindra Pai said the company raised the money against "6 million sq ft receivables including joint development projects".
The company has invested the funds for a period of six years. Century has about 21 million sq ft of property under development including joint development. It has a debt of Rs 500 crore. Pai further said that the company has deferred its initial public offering plan as the "primary market is not good" and it has been able to raise money privately.
According to Cushman & Wakefield, PE investments in real estate across the country increased to Rs 10,876 crore during the first half of the year fromRs 4,000 crore a year ago. The total number of deals increased to 39 from 27.