Mahindra Lifespace to raise $50 mn from IFC to support $210-mn projects

Company to develop industrial clusters in Rajasthan, Gujarat and Maharashtra

Mahindra Group's real estate arm Mahindra Lifespace Developers Limited (MLDL) plans to raise $50 million from the International Finance Corporation (IFC). The investment will support the company's plan to develop three industrial clusters (ICs) in Rajasthan, Gujarat, and Maharashtra at a cost of over $210 million.

IFC's proposed investment is a combination of equity and subordinated debt, with an equal investment from MLDL in a combination of instruments and assets. IFC will invest in one or more special purpose vehicles (SPVs) promoted by MLDL.

The three ICs are planned to be developed over the next four-six years in a staggered manner with full project completion by 2025.

The IC near Pune will be developed over an area of approximately 511 acres. It will comprise a domestic tariff area and engineering and auto ancillary units. Around 152 acres have already been purchased by Knowledge Township Limited (KTL), a subsidiary of MLDL.

For the Rajasthan IC, the SPV would utilise 500 acres from the existing Mahindra World City (MWC) in Jaipur (around 3,000 acres). The land for the project was transferred to Mahindra World City Jaipur Limited (MWCJL) by Rajasthan State Industrial & Investment Corporation (RIICO) on a 99-year lease.

The SPV would develop Phase-II within the already developed MWC Jaipur, 74 per cent of which is owned by MLDL and 26 per cent owned by RIICO, comprising a domestic tariff area and a multiproduct special economic zone (SEZ). As of date, 69 companies have purchased land within the project and 33 units are already operational.

With IFC's investment, MLDL can leverage its investment to develop a larger area than it would be able to on its own. Further, once the project is underway, there is potential to mobilise capital from a larger set of long-term investors to scale up the business and, thereby, accelerate growth in these regions, said IFC.

MLDL is a part of the Mahindra Group, which holds 51 per cent stake in the company. MLDL operates in three diversified business verticals, including residential developments, affordable housing, and large-format integrated cities and industrial clusters. The listed entity had a market capitalisation of $ 210 million in 2016.

MLDL has pioneered the concept of integrated business cities under the brand 'Mahindra World City' with developments in Chennai and Jaipur. These developments span around 4,400 acres and house over 130 reputed global and Indian companies, along with social infrastructure such as housing, schools, and hospitals.

The company also develops mid- and premium-range residential complexes and gated communities in India's six largest metro cities — Mumbai, National Capital Region (NCR), Pune, Bangalore, Chennai, and Hyderabad. It also has similar projects in Nagpur.

With two ongoing projects, affordable housing is the newest part of the company's business and is marketed under the 'Happinest' brand.