Canada Pension Plan Investment Board (CPPIB) and Singapore’s GIC Pte Ltd are in separate negotiations with Baring Private Equity Partners India to acquire the latter’s stake in property developer RMZ Corp., two persons aware of the matter said.
Baring PE holds a 21% stake in RMZ Corp., while Qatar Investment Authority (QIA), Qatar’s sovereign fund, holds 25%.
Baring’s 21% stake is valued at Rs2,400 crore, the first of the two persons mentioned above said on condition of anonymity.
CPPIB is Canada’s largest pension fund manager while GIC is a sovereign fund owned by the Singapore government.
Bengaluru-based RMZ Corp. is one of India’s leading commercial property developers.
Baring had invested Rs450 crore in RMZ 2012 while QIA invested Rs600 crore a year later.
Besides Baring, QIA is also looking to exit RMZ through a buyback option. Once the buyback deal with QIA is signed, promoter Menda family will hold 79% stake in RMZ. At present, it holds 54%.
Raj Menda, co-founder & corporate chairman, RMZ Corp., declined to speak on Baring PE’s exit plans. However, he said, “We are negotiating with QIA for the buyback and expecting clarity in a couple of weeks. Once we bought back the stake, promoter family will end up holding 79% stake in the company. Anyway, our relationship with QIA will continue as they will invest $100 million each in our upcoming SPVs.”
Rahul Bhasin, managing partner, Baring Private Equity Partners and a spokesperson with CPPIB declined to comment, while an email sent to GIC went unanswered.
Bengaluru-based RMZ Corp. which had a strong presence in residential development, shifted its focus to commercial development after declining sales.
It is planning to fully exit the residential business as it sets out on an expansion drive to boost its commercial portfolio across major cities in the country, according to a September 2016 Mint report quoting Thirumal Govindraj, managing director (management), RMZ Corp.
RMZ has been expanding its presence in commercial projects into other large markets like Mumbai. CoWrks, a unit of RMZ Corp. offering shared office spaces, is entering the Mumbai market, and leased 93,000 sq. ft at Birla Centurion building in Worli, according to a 6 December Mint report.
The company has around 20 million sq.ft of core assets under management across cities—Bengaluru, Mumbai, New Delhi, Hyderabad, Chennai and Pune, out of which RMZ owns 1.3 million sq.ft of premium homes and 0.6 sq.ft of retail & hospitality projects.
In 2016, RMZ signed a Rs2,350-crore deal to buy Essar Group’s Equinox Business Park in Mumbai’s financial hub Bandra-Kurla Complex; the deal fell through in September this year.
Canada’s Brookfield Asset Management Inc. has entered into exclusive talks with Essar Group to acquire the Equinox Business Park, Mint reported last week.
RMZ has also kept its plan to float a real estate investment trust (REIT) on the back-burner.
The company has started the process of selecting investment banks to manage its initial public offering (IPO) for its proposed REIT which could see the developer raise more than Rs2,000 crore ($300 million), Mint reported in February.
Top Canadian funds have been stepping up presence in the Indian real estate space for a while.
CPPIB has announced its plans to invest around $1.2 billion (Rs7,700 crore) in a joint venture with Indian developer IndoSpace to acquire and develop logistics facilities in the country.
The pension fund also formed a strategic investment platform with The Phoenix Mills Ltd (PML) to develop, own and operate retail-led mixed-use developments across India.
Last month, Ivanhoe Cambridge, the real estate investment arm of Caisse de depot et placement du Quebec (CDPQ)—Canada’s second-largest pension fund hired Chanakya Chakravarti, former managing director of global alternatives, Real Estate Asia, JPMorgan Chase & Co., to step up its Investments in India.