Friday, 8 March 2013

Aditya Birla Group Fund may buy 50% in Peninsula’s Pune project

Aditya Birla Group Fund may buy 50% in Peninsula’s Pune project

Aditya Birla Group's real estate fund is close to buying a 50% stake in AshokPiramal-led realty developer Peninsula Land's 30-acre township project in Pune for over Rs 115 crore.

The deal values the project's total development potential of 2-million sq ft at Rs 230 crore and may offer Aditya Birla Real Estate Fund returns of nearly 25%.

The fund has also agreed to share returns above this threshold of 25% with the Mumbai based listed developer. The process of due diligence is already over. Both parties are negotiating final terms and valuation. The transaction is likely to be concluded soon after the board of Peninsula Land clears it.

The fund has offered to share returns of above 25% for part of their stake to incentivise the developer to push the revenue and profitability of the project. Under this term, Peninsula Land will get to share returns of Aditya Birla Real Estate Fund in addition to returns from its own 50% stake. Increasingly, realty funds are using such mechanisms to get assured returns even in pure-equity transactions.

Peninsula Land had acquired total 33-acre land for Rs 150 crore in December 2011 from a joint venture company formed by Mumbai-based developer Ekta Group and Pune's Oxford Group. Of the 33 acres, the 30-acre land parcel on which the proposed development will come up is a contiguous plot. The rest 3 acre is around 300-400 metre away from the large plot. Peninsula Land had earlier planned to acquire the plots falling between these two to make it a contiguous one. However, having failed to achieve this, the developer is now looking to sell this 3-acre plot and go ahead with the development on the large parcel separately.

Currently, Peninsula Land is awaiting final approvals for the project from the civic authority and is aiming to start construction by July with a total estimated development schedule of five years. Aditya Birla Real Estate fund, part of Aditya Birla Financial Services, has a total corpus of Rs 1,100 crore and has so far deployed and committed around . 300 crore through five transactions . The proposed transaction for the Pune project of Peninsula Land will be the fund's sixth investment deal, leaving over . 700 crore for further deployment in the next one year. More details here

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