Shapoorji Pal­lonji,al­lianz tie up for $500 mn realty fund

Mint ST - - DEALS - BY BIDYA SAPAM bidya.s@livemint.com MUM­BAI

Deal part of Al­lianz’s strat­egy to al­lo­cate 5% of global port­fo­lio to Asia Pa­cific re­gion

Global in­sur­ance firm Al­lianz Group on Thurs­day an­nounced that it has part­nered with Shapoorji Pal­lonji Group to set up a $500 mil­lion real es­tate fund— SPREF Ii—which will in­vest in com­mer­cial of­fice prop­er­ties in In­dia.

The trans­ac­tion, which marks the Ger­man firm’s first in­vest­ment into real es­tate in In­dia, was con­ducted by Al­lianz Real Es­tate, a $63.5 bil­lion real es­tate in­vest­ment and as­set man­age­ment firm within the group.

This deal forms part of Al­lianz’s strat­egy to al­lo­cate around 5% of its global real es­tate port­fo­lio to the Asia Pa­cific re­gion, the com­pany said in a state­ment.

Al­lianz will own 50% of the plat­form, with the rest held by longterm in­sti­tu­tional in­vestors. The fund plans to raise $500 mil­lion in eq­uity.

“In­dia is strate­gic to the Al­lianz Group. In growth economies like China and In­dia, real es­tate pro­vides a scal­able en­try into the mar­ket for Al­lianz in terms of in­vest­ments/as­set man­age­ment exposure,” said Fran­cois Trausch, global chief ex­ec­u­tive of­fi­cer (CEO), Al­lianz Real Es­tate.

The fund plans to build a “long term, cash flow pro­duc­ing of­fice port­fo­lio by ac­quir­ing a blend of de­velop-to-core, for­ward pur­chases, and sta­bi­lized or sta­bi­liz­ing as­sets.”

It has six tar­get cities—mum­bai, Ben­galuru, Hy­der­abad, Pune, Chen­nai and Delhi-na­tional Cap­i­tal Re­gion.

Khai­tan & Co., Ernst & Young, and Mac­quarie Cap­i­tal Se­cu­ri­ties (In­dia) Pvt. Ltd acted as ad­vi­sors to Al­lianz, while JLL, AZB and PWC were ad­vis­ers to Shapoorji Pal­lonji Group.

“We are look­ing to de­ploy ap­prox­i­mately 60% of our Asia-pa­cific al­lo­ca­tion to growth economies. The In­dian econ­omy has been con­sis­tently out­per­form­ing,” said Rushabh De­sai, Asia-pa­cific chief ex­ec­u­tive of­fi­cer, Al­lianz Real Es­tate.

Founded in 1865, Shapoorji Pal­lonji Group is en­gaged in construction, in­fra­struc­ture and real es­tate busi­nesses across the coun­try.

The ven­ture, sup­ported lo­cally by the Shapoorji Pal­lonji In­vest­ment Ad­vi­sors team led by Ra­jesh Agar­wal, has the po­ten­tial to buy out or de­velop close to $ 1.5 bil­lion worth of com­mer­cial projects across In­dia, the com­pany said.

“We view this part­ner­ship with Al­lianz as the first step in a re­la­tion­ship which will fo­cus on cre­at­ing long-term value for the in­vestors and will be sup­ported by Shapoorji Pal­lonji Group’s sub­stan­tial cre­den­tials and ex­pe­ri­ence in de­liv­er­ing and man­ag­ing real es­tate as­sets across key mar­kets in In­dia,” said Shapoor Mistry, chair­man of Shapoorji Pal­lonji Group.

Shapoorji Pal­lonji Real Es­tate al­ready has a $ 250 mil­lion eq­uity plat­form with IFC, a mem­ber of the World Bank Group, and Asian De­vel­op­ment Bank to de­velop af­ford­able hous­ing projects across In­dia.

At present, three projects with a to­tal size of around 15,000 units, are at var­i­ous stages of de­vel­op­ment. In 2015, the Mum­bai-based con­glom­er­ate along with Cana­dian Pen­sion Plan (CPPIB) ac­quired a 2.7 mil­lion sq. ft op­er­a­tional In­for­ma­tion Tech­nol­ogy park in Chen­nai for around $220 mil­lion.

“There has been in­creas­ing in­ter­est in In­dian real es­tate op­por­tu­ni­ties and among in­ter­na­tional in­vestors, pen­sion funds and in­sur­ance com­pa­nies are keen on par­tic­i­pat­ing in the In­dian growth story,” said Shob­hit Agar­wal, head of cap­i­tal mar­kets at JLL In­dia.

He said the grow­ing de­mand for both of­fice space and lo­gis­tics fa­cil­i­ties from e-ccom­erce firms and the re­forms laid out by the govern­ment to im­prove trans­parency in real es­tate have made it eas­ier for for­eign cap­i­tal to en­ter the In­dian real es­tate mar­ket.

HEMANT MISHRA/MINT

The real es­tate fund will in­vest in com­mer­cial of­fice prop­er­ties in In­dia.

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