Embassy Group eyes stake sale to raise Rs 5,000 cr

Will use proceeds to fund new projects in commercial real estate, hospitality and warehouses

Bengaluru-based real estate firm Embassy Group plans to divest nearly a third of its stake to raise Rs 5,000 crore to fund expansion of its new projects in commercial real estate, hospitality and warehouses across India.

Embassy, backed by global private equity major Blackstone for its commercial property venture, has lined up investments of Rs 4,500 crore over the next few years in building new offices, growing its hotel business ten folds and setting up warehouses and factories for global players and e-commerce firms such as Amazon.

"We have a good commercial portfolio which is good for the investors also. Instead of debt, I would rather take equity and allow investors an opportunity to make money," said Jitu Virwani, chairman of Embassy Group.

Embassy has 24 million square feet of space built across cities, including 16.2 million square feet of office space leased to multinational firms such as IBM, Microsoft, J P Morgan, J C Penny and Volvo.

The firm said bulk of its developments are in key metros such as Bengaluru and Pune, where office space occupancy is around 90% and supply demand gap can be met in three to six months.

In Mumbai, nearly a fifth of the 101.1 million sq feet office space is vacant and would take over three years to fill the empty space, while in Delhi, it would take over 5.4 years to fill the 31% vacant office space.

Besides Blackstone, Embassy has backing of $175 million from Warburg Pincus for its logistics joint venture - Embassy Industrial Parks, which will focus on building warehouses for e-commerce firms such as Flipkart and Amazon and factory space for global manufacturers who come to India.

"Most warehouses currently are set up land owners who look at rent income from the property. Here, we are offering ready property with all facilities, but also have a dedicated team to service them during the period they occupy our space," said Anshul Singhal, chief executive officer of Embassy Industrial parks.

Embassy plans to increase hotel rooms to over 1,500 from the existing 150 - by adding four new properties in Bengaluru, both five star and budget category with convention centres to meet demand of its clients. The firm has a 150 room hotel under the Hilton Brand in Bengaluru.