Tuesday, July 21, 2015

Big #FDI in Real Estate: #Warburg Pincus to invest Rs.1800 cr. in #Piramal Realty

An affiliate of global private equity firm (PE) firm Warburg Pincus will invest Rs.1800 crore (US$284 million) for a minority stake in Piramal Realty, the real estate development arm of Piramal Group.This is amongst the largest FDI in Real Estate sector in India in recent times.
Ever since the Union Government eased the Foreign Direct Investment (FDI) norms for the construction development sector there has been a substantial boost to the sector in terms of greater foreign capital inflows.Between April 2000 and September 2014, the construction development sector received about $24 billion, constituting 10 per cent of the overall FDI into the country during the period. However, since 2012-13, FDI inflow into the sector has slowed drastically. In 2012-13, it fell to $1.3 billion from $3.1 billion the previous year. It again declined to $1.2 billion in 2013-14. During the first six months of this financial year, only $568 million has flowed into this sector.
The capital raised will be used to expand Piramal Realty’s portfolio and acquire marquee land parcels in and around Mumbai.Founded in 2011, Piramal Realty is a Mumbai based developer that has over 10 million square feet under development in prime areas of Byculla, Thane, Worli, BKC and Mulund.

Ajay Piramal, Chairman, Piramal Group said, “We are delighted to partner with Warburg Pincus for a second time: the first was when they invested in Piramal Healthcare in 1997, and now with Piramal Realty. Warburg Pincus’ investment and expertise will raise the level of real estate in India to international standards, as it has done in other industries such as telecom, financial services and pharmaceuticals.”

Niten Malhan, Co-Head of India, Warburg Pincus stated “Warburg Pincus invests in companies with high growth potential and believes that Piramal Realty is best positioned to achieve leadership in one of the world's most attractive real estate markets. Piramal Group's strengths such as its strong values, its track record of creating long term value for stakeholders, its trusted brand, its ability to recruit great people, its emphasis on customer centricity and its reputation as strong deal makers are some of the reasons why the firm chose to invest in Piramal Realty.“

Founded in 1966, Warburg Pincus has raised 14 private equity funds which have invested more than US$50 billion in over 720 companies in more than 35 countries. The firm's past and current investments in India include Ambuja Cements, Au Financiers, Bharti Airtel, Dainik Bhaskar, Diligent Power, Capital First, Gangavaram Port, Havells, HDFC, Kotak Mahindra Bank, Kalyan Jewellers, Lemontree Hotels, Max India, Metropolis Healthcare, Piramal Healthcare, and Sintex.