The PE giant has in principle interest to invest $100 million to help the developer script IPO story.
Private equity giant TPG Capital may be backing a consolidation move attempted by Bangalore-based real estate developer Shriram Properties in acquiring real estate assets.
At least two sources, directly familiar with the developments, said, TPG was willing to consider investing around $100 million in the developer who is mulling an initial public offer in the near future.
"This is an in-principle interest, not a commitment, to participate in opportunistic acquisitions that will bolster the IPO story," explained one source. TPG has earlier backed another Shriram group company when it picked up a 49% stake in Shriram Retail Holdings, the holding company
of Shriram City Union Finance, for Rs 530 crore in 2008. This was followed by an open offer for another 20% stake.
of Shriram City Union Finance, for Rs 530 crore in 2008. This was followed by an open offer for another 20% stake.
When contacted, a TPG spokesperson declined to comment. Shriram Properties MD M Murali said, the company was scouting for portfolio acquisitions and was in discussions with several PE funds. The company has not received any specific interest from TPG regarding this, he told VCCircle on phone, when contacted, while an emailed query remained unanswered. Shriram Properties is in the market for opportunistic buyouts to script a story for the proposed IPO. This could include portfolio acquisitions or outright M&A, sources added. Shriram Properties had discussed a portfolio transaction with Bangalore-based Sobha Developers last year but has renewed its prowl in a sector where consolidation play is usually tough.
In July last year, The Economic Times reported that Shriram Properties was working with Macquarie and Enam for a Rs 500-700 crore IPO, even though the timeframe for the same may be stretched in the current environment.
Any potential portfolio transaction would involve Shriram Properties buying a bouquet of real estate projects from a developer at the SPV level. Shriram could also look at the option of reverse merger, where it acquires a listed company and merges with it. This could be a possibility if the markets remain choppy and an IPO becomes a challenging proposition.
Shriram has projects under development in Bangalore Vishakhapatnam and Kolkata. Shriram has completed 4.23 million sq. ft. of residential space and 1.03 million Sq. ft. of commercial space, in addition to 67 million Sq. ft. of built-up area currently under various stages of development.
The firm has also recently forayed into the area of mid-income housing. It raised Rs 40 crore from ICICI Prudential Asset Management Company Limited and India Opportunities Real Estate Fund (Mauritius Bangalore
Though real estate firms have rushed to file for their public offerings, the markets appear to have lost the appetite for such issues. Some like Godrej Properties, DB Realty Ltd and Vascon Engineers have already managed to go ahead with their listing. Over half a dozen players like Emaar MGF, Lodha Developers, Sahara Prime, Prestige Estates, Nitesh Estates and Oberoi Realty are also waiting in the wings. But with market volatility increasing, some of the larger issues like those of Emaar MGF, have been delayed.
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