Brookfield in talks with Aditya Birla to buy its Real Estate Fund 1 assets

Bankers have approached the private equity firm, others to take over seven investments of the fund

Canada-based Brookfield Asset Management is in talks with Aditya Birla Sun­­life Asset Management Company to buy the investments of Aditya Birla Real Estate Fund 1, which is into liquidation, say sources. 

The fund’s bankers have approached Brookfield to take over the seven investments of the fund. Brookfield is evaluating it, said the sources. One said the bankers had approached other investors, too.

The fund did 13 investments. It has fully exited four and did a partial exit in one. 

Mails sent to Aditya Birla Capital did not elicit a response. Brookfield declined to comment on the matter.

Aditya Birla Sunlife Asset Management Company launched the fund in 2010, for a tenure of six years. It has already extended the life by two years, Akshat Pandya, head of real estate investment advisory at the fund manager, said in a recent letter to its investors.

The fund raised Rs 1,056 crore. It managed to return Rs 601 crore or 57 per cent of the initial investment to its investors till date, the letter from the fund manager said. 

With the net asset value of the fund at 0.89 times as on March-end, by an independent valuation, investors are likely to lose their principal.

“Structural changes brought about by the Goods and Services Tax regime and the Real Estate (Regulation and Development) Act have hampered demand and absorption levels in the sector,” said Pandya. 

He added, “A liquidity crisis which has hurt non-banking financial companies the worst has added stress and, as a result, buyers have turned extremely cautious.”

People in the know said Brookfield had also looked at buying the assets of Altico Capital but the deal did not move ahead, as the latter wanted to sell the whole portfolio but Brookfield wanted to cherry-pick the assets.

However, Altico’s chief operating officer, Sanjeev Agrawal, denied that Altico was in talks with investors. “We have long-term shareholders. We are always looking to churn the book,” he said.

Brookfield has bought the Special Economic Zones of Unitech Corporate Parks and the Powai assets of Hiranandani in the past. 

It has put about $4.5 billion (Rs 32,300 crore) in Indian real estate. It has lent about $500 million to developers here and islooking to double the debt portfolio this year.

“They are evaluating two other buyout proposals, including portfolios and individual assets,” the sources said.