Piramal, CDPQ Tie Up to Invest in Residential Cos
CDPQ arm Ivanhoe Cambridge to put in $250 m to offer equity capital to developers
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