Baring Private Equity Partners India (BPEP), along with some of its international investors, is likely to invest about $75 million, or approximately Rs 350 crore, in the Bangalore-based Century Real Estate. Baring’s individual commitment to the deal is around $53 million, while overseas investors who are backing the fund may bring in a little over $20 million in additional investment.
Industry sources say that Baring has initiated the diligence process. As the realty firm is still working out the commercial terms, sources say the deal could be closed in February. The Baring-led investors may pick up around 26% stake in the holding company, which is one of the largest land aggregators with an estimated 3,000 acres of land bank in south India. The investment may be deployed as seed capital to develop multiple townships around Bangalore. E&Y and KPMG are assisting with the due diligence.
Century Real Estate is majority owned by real estate entrepreneur Dayanand Pai and his family. The Manipal Education and Medical Group (MEMG) promoters also have minority investments at SPV (special purpose vehicle) levels.
BPEP, which manages assets worth about $1 billion, issued a term-sheet for a possible investment two months ago, sources added. An alternative possibility of the PE fund investing into an SPV holding a clutch of assets is also being considered. When contacted, a Baring India official refused to comment.
Last year, Century embarked on raising $120-150 million and has held talks with PE investors, including DE Shaw, Apollo Management, Morgan Stanley and Baring. US-based Fortress Capital is an investor in the company, and a part of the $150 million investment was aimed at repaying some of the Fortress investment made through convertible instruments. BPEP, spearheaded by Indian private equity veteran Rahul Bhasin, roped in Varun Batra who headed Citigroup’s real estate investments in India to cut opportunistic deals in this comeback sector.
Century has 14 projects spread across 1.2 million sq ft under various stages of development. The realty company raised Rs 400 crore in debt some six months back to fund its projects. The firm is planning to develop an additional 1.7 million sq ft in the next financial year. It is investing Rs 250 crore in a 68-acre integrated township close to the Bengaluru International Airport. The company has also entered into a management contract with hospitality major Four Seasons to set up a luxury hotel in Bangalore. The project, which broke ground last week, is expected to be completed by 2013. It will also house 100 branded residences, high-end retail stores and commercial complexes.
