Pi­ra­mal, CDPQ Tie Up to In­vest in Res­i­den­tial Cos

CDPQ arm Ivan­hoe Cambridge to put in $250 m to of­fer equity cap­i­tal to de­vel­op­ers

The Economic Times - - Companies: Pursuit Of Profit - Kailash.Babar@ times­group.com

Mum­bai: Pi­ra­mal En­ter­prises has en­tered into a strate­gic part­ner­ship with Ivan­hoe Cambridge, a real es­tate sub­sidiary of Caisse de de­pôt et place­ment du Que­bec (CDPQ), to pro­vide equity cap­i­tal to res­i­den­tial de­vel­op­ers across five ma­jor In­dian cities.

This is one of the first large plat­forms be­ing formed for equity par­tic­i­pa­tion in the realty sec­tor in the past few years, es­pe­cially af­ter the global fi­nan­cial cri­sis in 2008.

Ivan­hoe Cambridge is al­lo­cat­ing an ini­tial cap­i­tal of $250 mil­lion for this pur­pose. Pi­ra­mal En­ter­prises will com­mit an ad­di­tional amount along­side and co-in­vest be­tween 25% and 50% of each trans­ac­tion.

“CDPQ is one of the largest global funds and they have part­nered with us af­ter a de­tailed due dili­gence on our pro­cesses, sys­tems, qual­ity of in­vest­ments and part­ners. Sev­eral best funds in­clud­ing Bain Cap­i­tal, CPPIB, Gold­man Sachs and TPG have part­nered with us so far. It gives me sat­is­fac­tion that such large funds are part­ner­ing us,” Ajay Pi­ra­mal, chair­man, Pi­ra­mal En­ter­prises, told ET. Ivan­hoe Cambridge may in­fuse more cap­i­tal in this part­ner­ship at a later stage de­pend­ing on the op­por­tu­ni­ties and per­for­mance, he said.

“In­dia rep­re­sents a key mar­ket for our global growth, and we look for­ward to a long-term and fruit­ful busi­ness re­la­tion­ship with Pi­ra­mal in the years to come,” said Michael Sabia, pres­i­dent & CEO, CDPQ.

The said cap­i­tal will be in­vested in se­lect list of de­vel­op­ers with demon­strated ex­e­cu­tion track re- cord, cor­po­rate gov­er­nance and strong re­turn po­ten­tial. The in­vest­ment fo­cus will be on projects in Mum­bai Metropoli­tan Re­gion, Delhi-Na­tional Cap­i­tal Re­gion, Ben­galuru, Pune and Chen­nai.

“Through this plat­form, we will fo­cus mainly on pure equity fund­ing for tier-I de­vel­op­ers. We will in­vest in mid­mar­ket in­clud­ing af­ford­able hous­ing projects with min­i­mum in­vest­ment size of $30 mil­lion. We would con­clude to­tal 6-8 trans­ac­tions through this. We be­lieve that the tim­ing is op­por­tune for the pro­vi­sion of both pure and pre­ferred equity cap­i­tal at an early stage in the project life cy­cle,” said Khushru Ji­jina, MD, Pi­ra­mal Fund Man­age­ment.

In Fe­bru­ary 2016, ET had re­ported that Pi­ra­mal Fund Man­age­ment is plan­ning to en­ter into a joint ven­ture with a global sov­er­eign fund to of­fer equity fund­ing to de­vel­op­ers.

Pi­ra­mal En­ter­prises, through its fi­nan­cial ser­vices divi­sion Pi­ra­mal Fund Man­age­ment, pro­vides both whole­sale and re­tail fi­nan-

cing op­tions in realty and non-realty sec­tors, in­clud­ing re­new­able energy and in­fra­struc­ture. The plat­form pro­vides fund­ing through early stage pri­vate equity, struc­tured debt, se­nior se­cured debt, con­struc­tion fi­nance and flexi lease rental dis­count­ing.

In Fe­bru­ary 2014, Pi­ra­mal En­ter­prises formed a strate­gic al­liance with Canada Pen­sion Plan In­vest­ment Board (CPPIB) to set up a $500 mil­lion real es­tate fi­nance com­pany in In­dia, with both the en­ti­ties mak­ing an ini­tial com­mit­ment of $250 mil­lion each. The al­liance has been of­fer­ing ru­pee debt fi­nanc­ing to res­i­den­tial real es­tate projects, mainly in Mum­bai, Delhi-NCR, Chen­nai, Pune and Ben­galuru. Pi­ra­mal Fund Man­age­ment, one of the largest in­vestors of real es­tate in In­dia, has so far de­ployed ₹ 22,740 crore through debt and ₹ 7,040 crore through equity trans­ac­tions as on De­cem­ber end.

“Given the scale of our ex­ist­ing real es­tate of­fer­ing and ros­ter of ex­ist­ing de­vel­oper re­la­tion­ships, the part­ner­ship will en­able us to ex­e­cute on very com­pelling op­por­tu­ni­ties to de­liver high qual­ity res­i­den­tial devel­op­ments in the lo­cal mar­kets that we ser­vice,” Pi­ra­mal ex­plained.

In Feb 2014, Pi­ra­mal formed a strate­gic al­liance with CPPIB to set up a $500 m real es­tate fi­nance firm in In­dia

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