Godrej Properties (GPL), the real estate arm of Godrej group, today said it has created a Rs 770 crore development fund with a clutch of global investors including Dutch pension services provider APG and Sparinvest Property Fund II to develop residential properties in the country.
The fund will invest and develop three to five mid-segment residential properties in Mumbai, NCR and Bangalore and other cities such as Pune and Chennai.
GPL and investors will bring in equity at a ratio of 29:71 and share the profits in the same ratio, the company said in a release. Besides Godrej Properties will also get a development fee as development manager of the projects.
The fund will help GPL, which focuses mainly on joint ventures and joint development, to go more outright purchases.
"The platform will enable GPL to capture outright land purchase transactions in currently dislocated market conditions without deviating from its asset light model and is expected to generate substantial earnings over the next 7 years, which will contribute significantly to the company’s growth," GPL said in a release.
Pirojsha Godrej, managing director and chief executive, Godrej Properties said, “We are excited about this association with a global investor group led by APG, which will enable GPL to source deals with large capital requirements in our focus markets of Mumbai, NCR and Bangalore. This is an important growth opportunity for GPL which will allow us to extend the number of projects in our portfolio while maintaining our capital efficient land sourcing strategy.”
Sachin Doshi, Senior Portfolio Manager for APG in Hong Kong said: “We are looking forward to this relationship with Godrej Properties to invest in the mid-income residential segment in India’s tier-1 cities. In our view, these cities will continue to be long term beneficiaries of India’s urbanisation trends and also represent the deepest pools of residential demand in the country. We particularly like Godrej Properties’ capital efficient strategy and the strong brand affinity it enjoys with its customers and stakeholders.” Macquarie Capital (India) Private Limited acted as the sole financial advisor for the transaction.
Godrej Properties stock was trading at Rs 529.50, which was 0.34% higher than Friday's close