The Chennai-based Shriram Group, is expanding its realty business Shriram Properties. As per the plans the Group will invest around Rs 1,500 crore over the next three years in developing various residential projects. The zero-debt company says 60 per cent of this investment, or around Rs 900 crore, would be funded through equity, from existing or new investors. These investors would include various private equity (PE) funds already invested in Shriram Properties or in its particular projects or in the Shriram Group, such as ICICI Prudential, Sun Apollo, Walton Street Capital and Starwood Capital. TPG Capital is another PE firm which would invest in the coming projects; it has not yet invested in any group company.
The projects include acquisitions of projects begun by other companies but then at a standstill due to lack of finance. In such cases, Shriram Properties would buy over the project. The company says the first of two such acquisitions, one in Chennai and the other in Bangalore, are in the final stages of negotiations.
Shriram Properties’ managing director, M Murali, said: “The company would invest around Rs 160-160 crore for the two acquisitions. The total value of these two projects would be around Rs 800 crore. Around 3.3 million sq ft would be developed in these two projects”, “We find project acquisitions a good opportunity at this point of time. After the recent scams in the sector, real estate companies are finding it very difficult to raise money from the banks, since the lenders are facing a high number of defaults by real estate companies. This had brought various residential projects to a halt, he added”
The focus would, for now, be mainly in South India, he said. “Going forward, we will find more such opportunities. We are also looking for outright merger and acquisitions, provided the prospective company’s book is clean.”
