Godrej Fund in talks with Bengaluru-based developer for Rs 1,200-cr deal

Godrej Fund Management (GFM), the private equity arm of Godrej Group, is in the final leg of talks with Bengaluru-based developer Puravankara to acquire 1-million square (sq.) feet (ft) commercial property in the Byappanahalli area of the Karnataka capital from it, said sources in the know.

The deal is expected to close at Rs 1,200 crore. It will be structured as a forward purchase agreement wherein the seller will sell the property at a future date at an agreed value after completing it.

If the deal fructifies, it will be one of the biggest commercial property deals in the country this year.

"The deal will help Puravankara raise funds and help Godrej gain a foothold in Bengaluru's commercial property market," said a source.

The spokespersons for Godrej and Puravankara withheld their comments at the time of going to press.

This is the second property bought by GFM in Bengaluru this year. The fund manager bought a land parcel from Century Real Estate Holdings earlier this year for Rs 700 crore.

GFM is looking to raise a $500-million fund from global investors to invest in properties, its Managing Director (MD) and Chief Executive Officer Karan Bolaria told Business Standard recently.

The fund manager invested the full corpus of its $450-million build-to-core fund and Godrej Office Fund of $150 million.

GFM has around 4 million sq. ft of office property under development. Of this, 1 million sq. ft will become operational by December this year. The remaining 3 million sq. ft will become operational in the next 24-36 months.

“There is shortage of Grade A office properties. There are a lot of sectors such as information technology in need physical offices, which is a favourable trend for our platform,” said Bolaria.

Bolaria said GFM is actively looking to buy land in Mumbai, Delhi-National Capital Region, Pune, and Bengaluru. It is holding talks with many landowners to buy parcels.

“Land valuations have come down 10-20 per cent. This is a good time to buy land because of slide in valuations and demand for Grade A office properties,” added Bolaria.

He said GFM would look at floating a real estate investment trust once it reaches a certain scale. The fund manager is also looking at investment in data centres.

For its commercial real estate portfolio, Puravankara plans to invest Rs 7,000 crore over the next seven years to build 12 million sq. ft of assets. It has identified Bengaluru, Hyderabad, Mumbai, and Pune for commercial real estate, its MD Ashish Puravankara told a business daily recently.