Century Real Estate set to raise Rs 700 crore

Beefs up land asset base to 1,500 acres to unlock value

Century Real Estate Holdings, the realty development arm of three-decade old Bangalore-based Century Group, is looking to raise Rs 700 crore through private equity players in three tranches. The company which during the past four years have been focusing on development of projects, is understood to be effecting this deal at the holding company level. The company which raised around $200 million from Goldman Sachs during the recession of 2008-09, is beefing up its land asset base in the development holding arm to cross the 1,500 acre mark to raise additional funding.

Century Group, owned by real estate veteran Dayanand Pai, best known as an land bank aggregator in the real estate market, is said to be having more than 3000 acres of land in and around Bangalore city alone.

The Group during during 2010 is understood to have launched projects spanning 1.2 million square feet and is looking to launch projects spread over 1.7 million square feet during 2011.

The company currently has 343 acres from 12 SPVs (Special Purpose Vehicles) under its control and is set to add another 1,205 acres by merging another 32 SPVs into itself as it embarks on the fresh round of fund raise which is expected to tied up within third quarter of calendar 2011.

The first round of Rs 200 crore is expected within March 2011. Investment bankers close to the deal indicate that Century is in discussion with global & Indian private equity giants including Morgan Stanley, Goldman Sachs, Kotak Realty Fund, Baring Private Equity, HDFC Realty Fund among others for this deal. Howeve, the management of Century Real Estate Holdings declined to comment. Century Real Estate which had earlier initiated discussion with bankers for a possible public offer, seems to have put those plans on the back-burner and is actively courting PE players now. Century has been focusing heavily on development of residential projects with as much as 90 per cent of its development focusing on developing these units, while the rest has been for commercial projects. Bankers indicate that Century may be working towards a ratio of 70:30 (residential - commercial) over the next few years.

The PE fund raising is slowing picking up in the Bangalore real estate market with as much as $1 billion waiting to be raised from a clutch of players. Shriram Capital is close to raising $100 million from TPG, Brigade Group is looking at around Rs 500 crore most probably through the QIP route, while Embassy may come in with its Rs 2,400 crore IPO during 2011 and Mantri Developers looking to raise another Rs 500 crore.