MetroCorp set to raise Rs 1,500 cr

Second infusion of funds by the real estate firm.

In stark contrast to the failure of Sobha Developers to raise around Rs 700 crore through the Qualified Institutional Placement route, MetroCorp, a relatively recent entrant into the real estate market in Bangalore, is set to raise close to Rs 1,500 crore through the private equity route by July-end.

This infusion of Rs 1,500 crore will be on top of this firm raising a similar amount during February this year from global PE funds. Industry sources indicate that while one fund is from a global insurance firm the other is a pure-play global private equity fund.

The fresh infusion will be for various affordable housing projects Metro is taking up and is part of the first installment of Rs 2,500 crore which it is planning to raise over a period. MetroCorp is understood to have finalised land bank to the tune of around 1,300 acres in Bangalore city and suburbs and is planning 100,000 units of 350-400 square feet each priced at around Rs 4 lakh each. MetroCorp is a three-year-old real estate developer based in Bangalore and has been started by Deepak Krishnappa a former hedge fund manager in the US. The company with a topline of Rs 500 crore, has three projects under execution, and has lined up a bouquet of 21 projects across India, ranging from residential and commercial to integrated townships to special economic zones. Krishnappa while confirming that they are raising an additional Rs 1,500 crore declined to comment on the investors.

MetroCorp is understood to have tied up with land owners for developing close to 6,000 acres across the country and most of its projects are through joint ventures with land bank owners.

“We are not heavy on land bank and this is one of the key differentiators and the reason for not being heavy on debt,” Krishnappa added.

Industry sources indicate that the first round of Rs 1,500 crore was raised as mezzanine debt which will be converted to equity after a period of three years. The second infusion is likely to have a mix of mezzanine and equity. “A few of the investors from the first round are expected to participate in the second infusion as well,” sources close to MetroCorp noted.

MetroCorp’s fund-raising plans come nearly a year after the Century Group, another Bangalore-based land bank and real estate developer, mopped up $300 million from leading fund houses Goldman Sachs and Fortress. Sources said Century plans to raise another $200 million (over Rs 920 crore) to develop a 12-acre plot near the Bangalore International Airport is getting delayed. Industry analysts indicate that such big ticket real estate private equity deals are getting far and few in the Bangalore-real estate market, which was until recently much sought after by private equity investors.