Warburg Pincus set to invest Rs 1,800 cr in Piramal Realty

Will be used to expand Piramal Realty's portfolio and acquire marquee land parcels in and around Mumbai

In one of the biggest foreign direct investment (FDI) deals in the Indian real estate sector, global private equity firm Warburg Pincus will invest Rs 1,800 crore for a minority stake in Piramal Realty, the real estate development arm of Ajay Piramal Group.

In 1997, Warburg Pincus had invested in Piramal Healthcare.

The capital raised would be used to expand Piramal Realty’s portfolio and acquire marquee land parcels in and around Mumbai, the company said. Founded in 2011, Piramal Realty is based in Mumbai and has about 10 million sq ft under development in the prime areas of Byculla, Thane, Worli, the Bandra Kurla Complex and Mulund.

“Warburg Pincus was looking at an entity level investment in Indian real estate for the past 10-15 years. They could not find any… We did not need money earlier,” said Anand Piramal, executive director, Piramal group.

Ajay Piramal, chairman of the Piramal group, said, “Warburg Pincus’s investment and expertise will raise the level of real estate in India to international standards, as it has done in industries such as telecom, financial services and pharmaceuticals.”

Niten Malhan, co-head (India), Warburg Pincus, stated, “Warburg Pincus invests in companies with high growth potential. It believes Piramal Realty is best positioned to achieve leadership in one of the world’s most attractive real estate markets.”

The realty sector is increasingly attracting global investors. On Monday, Oberoi Realty said it had raised Rs 324 cr from Aranda Investments, an indirect subsidiary of Temasek Holdings. In May, Goldman Sachs and Nitesh Estates said they would invest $250 mn to buy assets. In July 2014, Piramal Enterprises and Dutch pension fund asset manager APG Asset Management had announced a strategic alliance to invest in mezzanine instruments (a hybrid of debt and equity financing).

Piramal has a fund management company, Piramal Fund Management, which lends to real estate developers via debt and equity. Last year, the group’s flagship company, Piramal Enterprises, had entered into a strategic alliance with Canada Pension Plan Investment Board to set up a $500-million real estate finance company in the country.

Issued by infrastructure companies in India, with an investment target of $1 billion through the next three years.

GLOBAL NAMES IN INDIAN REALTY FIRMS
Company / Investor

• Oberoi Realty / Morgan Stanley
• VBHC / Carlyle
• Piramal Realty / Warburg Pincus