Goldman Sachs, Deutsche Bank and one more financial investor are likely to make a combined investment of $800 million in three special purpose vehicles (SPVs) which are being created by real estate group Emaar MGF. Each SPV will have one financial investor who will hold a minority stake.
According to sources, the Delhi-based real estate developer is at an advanced stage of negotiations with private equity players and is likely to close three separate deals in a month. Emaar MGF spokesperson declined to comment on the development. These deals, once clinched, will be the first major fund flow into the real estate firm since it withdrew its IPO last February.
Emaar MGF (40% of which is owned by Dubai-based leading property developer Emaar and 56% by Delhi-based MGF) was forced to withdraw its Rs 7,000-crore share sale, the third-biggest in the history of the country, due to poor market sentiments. Since then, markets have lost steam on global cues, leading to dramatic erosion in the market cap of real estate firms. Real estate biggies such as DLF and Unitech have lost 45% and 50% of their market caps while smaller players such as Parsvnath and Omaxe witnessed a close to two-third erosion of their market caps from their January peak.
The poor market sentiments have also forced DLF, Unitech and Indiabulls to postpone Singapore listing of their real estate investment trust. Though money flow has not stopped in the real estate sector, developers, including the unlisted ones, are hesitant to go for equity dilution at parent company level fearing lower valuation. This has prompted most companies to look at private equity fund at project or SPV level.
Emaar MGF, too, is raising funds at SPV level purely because the current market situation may not have given them the expected valuation. Three SPVs, where the PE money is likely to come, are expected to take up development projects across verticals: housing, retail and office. The exact projects to be undertaken by these SPVs couldn’t be ascertained, but they would be part of the projects already being undertaken by the company.
Some of the mega projects the company has undertaken include a 3,000-acre integrated township in Mohali, a 531-acre integrated township in Hyderabad and a 14-acre residential project in Chennai. The company is also executing the prestigious Commonwealth Games village project, where it is developing a 27.7-acre residential complex with an estimated saleable area of 1.8 million square feet.
The company also plans to develop more 200 hotels over the next 7-9 years. It has two equal joint ventures with Accor for 100 budget hotels and Premier Inn for 80 hotels. The company has also entered into separate management tie-ups with Hyatt, Intercontinental and JW Marriott to run a total of 26 hotels.
According to sources, the Delhi-based real estate developer is at an advanced stage of negotiations with private equity players and is likely to close three separate deals in a month. Emaar MGF spokesperson declined to comment on the development. These deals, once clinched, will be the first major fund flow into the real estate firm since it withdrew its IPO last February.
Emaar MGF (40% of which is owned by Dubai-based leading property developer Emaar and 56% by Delhi-based MGF) was forced to withdraw its Rs 7,000-crore share sale, the third-biggest in the history of the country, due to poor market sentiments. Since then, markets have lost steam on global cues, leading to dramatic erosion in the market cap of real estate firms. Real estate biggies such as DLF and Unitech have lost 45% and 50% of their market caps while smaller players such as Parsvnath and Omaxe witnessed a close to two-third erosion of their market caps from their January peak.
The poor market sentiments have also forced DLF, Unitech and Indiabulls to postpone Singapore listing of their real estate investment trust. Though money flow has not stopped in the real estate sector, developers, including the unlisted ones, are hesitant to go for equity dilution at parent company level fearing lower valuation. This has prompted most companies to look at private equity fund at project or SPV level.
Emaar MGF, too, is raising funds at SPV level purely because the current market situation may not have given them the expected valuation. Three SPVs, where the PE money is likely to come, are expected to take up development projects across verticals: housing, retail and office. The exact projects to be undertaken by these SPVs couldn’t be ascertained, but they would be part of the projects already being undertaken by the company.
Some of the mega projects the company has undertaken include a 3,000-acre integrated township in Mohali, a 531-acre integrated township in Hyderabad and a 14-acre residential project in Chennai. The company is also executing the prestigious Commonwealth Games village project, where it is developing a 27.7-acre residential complex with an estimated saleable area of 1.8 million square feet.
The company also plans to develop more 200 hotels over the next 7-9 years. It has two equal joint ventures with Accor for 100 budget hotels and Premier Inn for 80 hotels. The company has also entered into separate management tie-ups with Hyatt, Intercontinental and JW Marriott to run a total of 26 hotels.