25 July 2018

1. Singapore’s GIC set to buy up to 50% in Provenance Land

Government of Singapore’s sovereign wealth fund GIC is set to acquire up to 50% in Provenance Land that owns India’s first Four Seasons hotel and an under-construction luxury development in Mumbai’s sea-facing Worli area.

(Source: Economic Times, 18 July, 2018)

Research View

The government of Singapore’s sovereign wealth fund, GIC is set to acquire up to 50% stake in provenance land. Provenance land owns India’s first operational four seasons hotel and an under-construction luxury residential development in Mumbai’s sea-facing Worli area. GIC and provenance land is planning to develop a commercial project admeasuring 0.5 million sq ft (0.05 million sq m) on a two-acre land property adjacent to the existing hotel and residential project site in Worli. As per media sources, this deal is likely to be valued at INR 1,000 crore (USD 146 million). This will be GIC’s second-largest investment transaction in India after it agreed to buy 33.34% in DLF’s rental arm for around INR 9,600 crore (USD 1.4 billion) in 2017. In our opinion, this transaction further adds to the increasing trend of large global institutional investors investing aggressively in Indian real estate assets as witnessed over the past few years. We expect growth momentum in commercial real estate investments to surge as institutional investors are increasing their investment portfolios in the backdrop of opening up of an avenue for monetisation through Real Estate Investments Trusts (REITs).

2. Piramal Capital plans to raise $500 million fund to set up platform for asset aggregation

Piramal Capital & Housing Finance, a wholly-owned subsidiary of Piramal Enterprises, is planning to raise a $500-million fund to set up an asset aggregation platform that would bring together a portfolio of yield-producing operating properties across sectors.

(Source: Economic Times, 08 July, 2018)

Research View

Piramal Capital & Housing Finance is planning to raise INR3400 crore (USD500 million) fund to set up an asset aggregation platform that would bring together a portfolio of income-yielding properties across sectors. The proposed platform is likely to be established through an Infrastructure Investment Trust (InvIT) or an Alternative Investment Fund (AIF) over the next three months. As per media reports, while the money for the proposed fund will be raised both overseas and at home, about 7-8% would come from Piramal Group as sponsor commitment. The platform will be used for a fund that will use various capital structures, including equity and debt, or a combination of both while acquiring assets. In our opinion, institutional investors are rightly focusing on drawing maximum benefit out of new government policies like InvITs and AIF for the betterment of asset qualities and transparency in their business model. As per the media sources, registered AIFs in India have more than doubled over the past couple of years and number approximately 366 in 2017. A range of AIFs has been launched by institutions ranging from Avendus Capital, IIFL Asset Management, Edelweiss, Reliance Capital, Axis Mutual Fund, Lake Shore India Management and Old Bridge Capital Management. Mirae Asset Management has also indicated its keenness to enter the space. We expect, with government’s regulatory push, tax breaks and rising interests from institutions, these new platforms like AIFs, InvIT and distressed asset management are likely to further grow in the Indian market over coming years.

3. Office space firm RMZ raising Rs 2,060 crore from Qatar fund

Office space developer RMZ Corp is in the process of raising $300 million (about INR 2,060 crore) from Qatar Investment Authority (QIA) to expand its office portfolio.

(Source: Economic Times, 04  July, 2018)

Research View

As per media sources, Bengaluru based leading commercial property developer RMZ Corp. is in final stages of discussion with Qatar Investment Authority (QIA) to raise INR 2,060 crores (USD 300 million) for expanding its existing portfolio from 28 million sq ft (2.6 million sq m) to 60 million sq ft (5.5 million sq m) by 2023. QIA is likely to invest in three Special Purpose Vehicles (SPV), located across southern cities of Bengaluru, Hyderabad and Chennai, cumulatively accounting to 6-8million sq ft (0.5-0.7 million sq m). This is the second time QIA is investing in RMZ Corp, the first being in 2013 with an investment of INR 600 crore (USD 87 million). This deal comes at a time when the Indian commercial real estate sector is gaining traction, primarily from global sovereign and pension fund management firms, majorly due to the high leasing momentum of around 42 million sq ft (3.9 million sq m) annually, coupled with low vacancy levels in preferred locations in major cities such as Bengaluru, Hyderabad and Mumbai. Other noteworthy transactions were the purchase of a 40% share by Singapore based sovereign fund GIC in Prestige Group for INR 1,400 crore (USD 204 million) in a high rent-yielding 5 million sq ft (0.46 million sq m) of commercial property in the last quarter. In Q2 2018, Canada Pension Plan Investment Board (CPPIB) invested INR 938 crore (USD 136 million) in the co-owned retail arm of Island Star Malls Developers (ISMD) and Phoenix Mills. In our opinion, investments by developer and investors in acquiring and developing premium Grade A buildings in strategical locations are expected to surge in the coming years.

Contact for more information

Colliers International | Mumbai, Indiabulls Finance Centre, 17th Floor, Unit No. 1701, Tower 3, Senapati Bapat Marg, Elphinstone (W), Mumbai 400 013, Maharashtra, India | Tel: +91 022 4924 9780