MUMBAI: US-based private equity giant Blackstone Group is set to acquire the remaining 50% stake in Indiabulls Real Estate’s commercial properties for around Rs 4,800 crore, said three persons with direct knowledge of the development. The deal is pegged as one the country’s largest real estate portfolio transactions.
This will give Blackstone full control of the portfolio and further strengthen its position as the country’s largest commercial property owner. Blackstone had concluded a similar deal for a 50% stake in this portfolio for nearly Rs 4,750 crore in March 2018.
The transaction is part of the Indiabulls Group’s strategy of exiting real estate completely and focusing on financial services as it seeks to merge with Lakshmi Vilas Bank. Also, Indiabulls Real Estate is planning to utilise the proceeds from this deal to repay its debt and bring it down to zero.
Indiabulls Real Estate’s total net debt stood at Rs 4,590 crore at the end of FY19.
“The transaction is expected to be concluded over the next few weeks,” said one of the persons cited above. “Both the parties have agreed in principle to conclude the deal. Indiabulls is expected to present the transaction to its board soon.”
Apart from controlling 50% stake in this 5-million-sq-ft commercial portfolio — including two marquee properties in Mumbai’s Lower Parel and Prabhadevi areas and one in Gurgaon — Blackstone had also acquired a 100% stake in the developer’s Chennai commercial property for around Rs 850 crore last year.
Blackstone declined to comment. Indiabulls Real Estate didn’t respond to queries.
The private equity firm is expected to add the assets to the portfolio of Embassy Office Parks Real Estate Investment Trust (REIT), its joint venture with Bengaluru-based realty developer Embassy Group.
Embassy Office Parks listed India’s maiden REIT in April. It has 33 million sq ft of office and hospitality assets, comprising seven business parks and four city-centric buildings in Mumbai, Bengaluru, Pune and Noida. The REIT raised Rs 4,750 crore through the issue that was subscribed 2.58 times.
In June, Embassy Group entered into an agreement to acquire Indiabulls’ promoter Sameer Gehlaut’s entire 39.5% stake in listed company Indiabulls Real Estate for Rs 2,700 crore. The transaction had put an enterprise valuation of Rs 7,000 crore on Indiabulls Real Estate’s portfolio — 23.5 million sq ft of residential projects and 2.4 million sq ft of commercial space under construction. These under-construction commercial properties are separate from the 5-million-sq-ft office properties portfolio in which Blackstone is picking up the remaining 50% stake.
As part of that deal, Embassy has already bought over 14% stake in the listed Indiabulls Real Estate through the open market. Embassy Office Parks REIT is expected to hold the right of first refusal on Indiabulls Real Estate’s under-construction commercial portfolio, once ready and leased. However, the decision will be taken independently by its board, ET had reported earlier.
The US-based multinational private equity, alternative asset management and financial services firm has emerged as the most aggressive institutional investor in India’s real estate sector and owns the biggest portfolio of income-producing office assets in the country. It has committed $5.3 billion in the key markets of Mumbai, Noida, Pune, Bengaluru, Chennai and Hyderabad.
It has invested across more than 50 companies in India. It has deployed more capital in India than in any other emerging market, with nearly $10.6 billion invested in the private equity and real estate sector.