Religare Enterprises, the financial services group promoted by Malvinder Singh and Shivinder Singh, was in advance talks with the Ajay Piramal group to buy a 60 per cent stake in the latter's private equity and fund management venture, Indiareit Fund Advisors, for Rs 175 crore, said an executive close to the development.
Indiareit was valued at around Rs 290 crore, the executive said.
The part exit from Indiareit was in line with Piramal Group's plans to consolidate its assets in the real estate space, the executive said. Piramal Group, which sold formulations business of its flagship Piramal Healthcare to US firm Abbott for Rs 17,000 crore five months ago, is believed to be focusing on real estate and pharma, besides entering into new sectors.
Indiareit, which manages real estate funds worth around $1 billion (Rs 4,500 crore) was in talks with many PE firms, including Blackstone and IL&FS Investment Managers, in the recent past, he said.
Apart from Indiareit, the group has two real estate ventures -- Piramal Sunteck, a joint venture with SuntecK Realty, and Piramal Realty. The group is also planning to develop large townships in the country and forge joint ventures with real estate developers.
For Religare, property fund management is a new foray after insurance, asset management, broking and wealth management, among others.
Indiareit Managing Director and CEO Ramesh Jogani denied the development, while a Religare Enterprises spokesperson, in an emailed response, said: "The information is not correct. We can't comment on market rumours and speculations."
Indiareit is promoted by Piramal Enterprises and is led by Jogani, who also has a minority stake. Indiareit manages three domestic funds, worth Rs 2,000 crore, and two offshore funds.
Recently, it raised Rs 950 crore through its domestic fund. Before that, London's AIM-listed, India-focused Trikona Trinity Capital appointed Indiareit as its investment manager. Indiareit manages around $230 million of Trikona's funds in India.
Analysts say both the groups are likely to gain from the deal, if it happens. "For Religare, it could be a good move. They had been harbouring aspirations in this area for the past three years. Now, they can take it forward," said Amit Goenka, national director (capital transactions), Knight Frank, a global property consultant.
"Indiareit can also gain from Religare's strengths. Net can be cast wider in terms of asset classes," Goenka said.
Indiareit's portfolio includes IT parks in Chennai, a 1.41 million sq ft commercial complex in Kurla (Mumbai) and 10 residential projects totalling a saleable area of 2.5 million sq ft spread across Bangalore, Chennai, Kochi and Mangalore. Its flagship, say sources, is the Hinjewadi SEZ project in Pune, where a 138-acre land parcel will get converted into an SEZ and an integrated township.
Trikona's Trinity's portfolio, which Indiareit manages, includes Luxor Cyber City, Uppal IT Park and a slum rehabilitation project in Worli (Mumbai). It also included investments in DB Realty, Phoenix Mills and Pipavav Shipyard.
The property funds space is seeing a lot of consolidation lately. Recently, IIML acquired Saffron Asset Advisors Pvt Ltd, a $440 million (Rs 2,050 crore) real estate-focused PE fund manager.
Global PE giant Blackstone, too, is in advanced negotiations to take over the management of the Asian real estate investments of Bank of America-Merrill Lynch's high-profile Asian Real Estate Opportunities Fund, whose portfolio, including debt, is pegged at $3.5 billion.