Salarpuria, Apollo form JV to buy out projects in Bengaluru, Vadodara

Bengaluru: Global alternative asset manager Apollo Global Management Llc and realty firm Salarpuria Sattva Group have formed a joint venture to buy out 100% stake in two projects, in Bengaluru and Vadodara, from a consortium of offshore investors for Rs.275 crore.

The investment, done through Apollo Asia RE Singapore Pte Ltd (Apollo Asia Fund), is a partnership between the Bengaluru-based developer and the investment firm where both will invest equity capital and develop the projects. The two undeveloped land parcels include 10 acres near Malleswaram in Bengaluru and 18 acres in Vadodara. Both will be turned into residential projects.

The land parcels were bought by a consortium of investors led by Lehman Brothers Holdings Inc. about eight years ago. The investors decided to sell them as a package deal, where the buyers had to buy both land parcels together.

“We are constantly looking at investment opportunities and will invest in the form of equity and structured debt. Given the group’s reputation and proven track record in real estate we believe they are very well positioned to add value to these projects,” said Nipun Sahni, partner at AGM India Advisors Pvt. Ltd.

AGM India Advisors is the Indian arm of Apollo Global Management.

In July, Apollo Global Management invested Rs.400 crore in Noida-based developer Logix Group through the structured debt route, in what was the New York-based investor’s first real estate transaction in India. The money will be used for last-mile funding to complete the construction of four ongoing residential developments and a commercial office project in Noida, on the outskirts of Delhi.

“These are greenfield opportunities. We plan to develop these projects as landmark residential developments and look forward to partnering with Apollo Asia Fund in more joint ventures in the future,” said Bijay Agarwal, managing director, Salarpuria Sattva Group.

Earlier this year, Blackstone Group Lp invested Rs.470 crore in Salarpuria Sattva’s ongoing office park project in Hyderabad’s Knowledge City, marking the global private equity fund’s first investment in the city. The developer raised the capital to fund Knowledge City, where it is building 6.5 million sq. ft of office space. The project is expected to be completed in 4-5 years.

Apollo took over Citi Property Investors, the real estate investment division of Citigroup Inc., in November 2010, resulting in the acquisition of the latter’s real estate assets in India.

In May 2015, Apollo Global appointed Sahni, former managing director, real estate private equity at Merrill Lynch, to head real estate investments in the country.

“A clutch of private equity funds is willing to invest a majority of the capital in land deals with reputed developers, and take equity and execution risk. But they ensure that the developer also puts in more skin in the game. Investors prefer to form joint ventures to buy third-party land parcels,” said Rajeev Bairathi, executive director, capital markets, at property advisory Knight Frank India.

Overall, private equity funds invested about $954 million in real estate projects in the country between January and June this year, compared to $1.66 billion in the same period in 2015, a sharp fall of 42%, according to data from investment tracker VCCEdge and Mint research.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.