Shapoorji, Al­lianz tie up for $500-mn of­fice fund

Business Standard - - FRONT PAGE - RAGHAVEN­DRA KA­MATH

Mum­bai-based con­glom­er­ate Shapoorji Pal­lonji has part­nered Ger­man in­surer Al­lianz to set up a $500-mil­lion fund to in­vest in of­fice prop­er­ties in the coun­try. Al­lianz will con­trib­ute half of the cor­pus and the rest will be raised from other in­sti­tu­tional in­vestors. Shapoorji will raise funds, man­age the as­sets, and exit the in­vest­ments. This is the third tie-up by Shapoorji for of­fice in­vest­ments.

Mum­bai-based con­glom­er­ate Shapoorji Pal­lonji has part­nered with Ger­man in­surer Al­lianz to set up a $500-mil­lion fund to in­vest in of­fice prop­er­ties in the coun­try.

Al­lianz will con­trib­ute half of the cor­pus and the rest will be raised from other in­sti­tu­tional in­vestors. Shapoorji will raise funds, man­age the as­sets and exit the in­vest­ments. This marks Al­lianz’s first real es­tate trans­ac­tion in In­dia.

This is the third tie up by Shapoorji for of­fice in­vest­ments. In 2013, it signed a 80:20 joint ven­ture (JV) with Canada’s pen­sion fund man­ager CPPIB to in­vest in of­fice as­sets, which has in­vested in an IT park in Chen­nai.

It has also tied up with Abu Dhabi’s sov­er­eign fund, Abu Dhabi In­vest­ment Author­ity, to in­vest in com­mer­cial prop­er­ties, but that is not a JV. The tie up is in race to buy a busi­ness park in Ban­dra Kurla Com­plex area in Mum­bai, re­ports said.

This deal forms a part of Al­lianz’s strat­egy to al­lo­cate about five per cent of its global real es­tate port­fo­lio to the Asi­aPa­cific re­gion, the Ger­man group said in a re­lease.

“With Al­lianz, we want to do con­trolled trans­ac­tions wherein the ma­jor­ity stake and de­ci­sion-mak­ing will be with us. This is to main­tain the Grade-A sta­tus of the prop­erty in the long run,” said Ra­jesh Agar­wal, chief ex­ec­u­tive at Shapoorji Pal­lonji In­vest­ment Ad­vi­sors.

Agar­wal said the fund can de­velop prop­er­ties worth $1.5 bil­lion as they can lever­age on their eq­uity in­vest­ments.

The fund will in­vest in Mum­bai, Ben­galuru, Hy­der­abad, Pune, Chen­nai, and Na­tional Cap­i­tal Re­gion.

Rushabh De­sai, Asi­aPa­cific chief ex­ec­u­tive of Al­lianz Real Es­tate, said: “We are look­ing to de­ploy ap­prox­i­mately 60 per cent of our Asi­aPa­cific al­lo­ca­tion to growth economies. Strong sec­u­lar growth, stel­lar de­mo­graphic trends, and im­prov­ing trans­parency are sup­port­ing sta­ble real es­tate oc­cu­piers as well as in­vestor de­mand, in par­tic­u­lar the of­fice sec­tor which is ideal for long-term core in­vestors like Al­lianz.”

Khai­tan & Co, Ernst & Young, and Mac­quarie Cap­i­tal Se­cu­ri­ties acted as ad­vi­sors to Al­lianz. JLL, AZB, and PwC were ad­vi­sors to Shapoorji Pal­lonji Group.

A num­ber of global in­vestors such as Black­stone, GIC, CPPIB, QIA have bet big on of­fice prop­er­ties in the coun­try due to the steady in­come they get in form of rent and cap­i­tal ap­pre­ci­a­tion of as­sets.

Black­stone it­self has in­vested over $3 bil­lion in of­fice as­sets and is said to be the largest owner of of­fice as­sets with a port­fo­lio of 70 mil­lion sq ft.

The coun­try ab­sorbed about 40 mil­lion sq ft of of­fice spa­ces in 2016. Va­cancy lev­els are fall­ing steadily over the past years.

ILLUSTRATION BY AJAY MO­HANTY

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