Allianz partners Shapoorji Pallonji to launch $500m real estate fund for India

Photo: Mint

In a move to grab a share of the lucrative Indian real estate market, European conglomerate Allianz has partnered with Indian construction major Shapoorji Pallonji Group to establish a $500-million fund.

The two partners will establish a Singapore-domiciled, rupee-denominated fund named – SPREF II. The fund is targeting to raise $500 million in equity to invest in the Indian office space in the top six cities in the country, according to an official statement.

While Allianz will own 50 per cent of the platform, the other half will be held by long-term institutional investors. The venture will be supported locally by the Shapoorji Pallonji Investment Advisors team led by Rajesh Agarwal.

The deal, which marks Allianz’ first real estate transaction in India, comes as a part of its strategy to allocate around 5 per cent of its global real estate portfolio to the Asia Pacific region.

The transaction was conducted by Allianz Real Estate, the $63.5 billion real estate investment and asset manager within the Allianz Group.

“India is strategic to the Allianz Group. In growth economies like China and India, real estate provides a scalable entry into the market for Allianz in terms of investments/asset management exposure,” said Francois Trausch, Global CEO of Allianz Real Estate.

India’s office space has attracted a lot of interest from both local and foreign investors. According to a recent Mint report, so far in 2017,  foreign investment deals worth over $2 billion have to closed in commercial real estate space—mainly to acquire stakes in projects and companies. Over $1.4 billion of more foreign investment is expected, to build and acquire office assets, and a further Rs 3,200 crore is being raised by domestic funds to buy office projects.

“The Indian economy has been consistently outperforming. Strong secular growth, stellar demographic trends, and improving transparency are supporting stable real estate occupiers as well as investor demand, in particular the office sector which is ideal for longterm core investors like Allianz,” said Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate.

Many global funds like Canada Pension Plan Investment Board (CPPIB), Blackstone, Qatar Investment Authority (QIA), GIC, Abu Dhabi Investment Authority (ADIA) and Dutch pension fund APG have been building up portfolios of commercial properties in India, either through partnerships with local partners or individual transactions.

Khaitan & Co, Ernst & Young, and Macquarie Capital Securities (India) Pvt Ltd acted as advisors to Allianz. JLL, AZB, and PWC were advisors to Shapoorji Pallonji Group.

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