Diversified firm Piramal Enterprises (PEL) has entered into a partnership with Ivanhoé Cambridge to provide long term equity capital to residential projects across five metros in the country. Ivanhoé Cambridge, a real estate subsidiary of CDPQ (Caisse de dépôt et placement du Québec) will be allocating an initial $250 million for this purpose.
“At a time when the real estate sector is going through a slowdown, this platform will help developers to raise funds for their projects. Such equity funding with Tier 1 development partners will enable us to deploy capital over a longer time horizon and facilitate participation in larger projects with the ability to generate returns across real estate cycles,” Piramal Fund Management Managing Director Khushru Jijina told PTI here.
This fund will be majorly focusing on providing pure equity, but if there are opportunities in structured equity also, this platform will do that as well, he said.
“In case of pure equity, Ivanhoé Cambridge will deploy nearly 75 per cent of the funds while PEL will commit an additional amount alongside and co-invest around 25 per cent for each transaction. However, in case of structured equity, both the parties will contribute equally for each transaction,” he said.
Jijina also said there is a strong demand for equity in the capital stack as developers increasingly prefer the option of partnering with investors in the early stages of the development life cycle over high cost financing.
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The investment focus shall include the Mumbai Metropolitan Region, Delhi (NCR), Bengaluru, Pune and Chennai.
When asked about the deployment of funds, Jijina said, “we plan to deploy almost Rs 200 crore per transaction. We may do almost 7-8 deals under this partnership. We are in touch with developers and we may close at least once deal in the next four months.”
Commenting on the deal, Ivanhoé Cambridge Chairman and Chief Executive Officer Daniel Fournier said, “Piramal, with its long experience, impressive track record and strong relationship with India’s top developers, will certainly play a key part in the success of this important investment.”
“India’s compelling demographic and economic fundamentals combined with supportive government policies bode well for a long-term residential development strategy such as this one,” said Fournier. PTI PSK NRB 02231513