Piramal Enterprises, CDPQ arm tie-up to give equity to realtors

The investment focus shall include the Mumbai, Delhi (NCR), Bangalore, Pune and Chennai

Ajay Piramal-led Piramal Enterprises on Thursday said it has formed a strategic partnership with Ivanhoé Cambridge, a real estate subsidiary of CDPQ (Caisse de dépôt et placement du Québec), to provide long-term equity capital to residential developers across five major metros. The development comes after long-drawn talks. 

Ivanhoé Cambridge is allocating an initial $250 million for this venture and both would also look at a fresh round of fund raising in the future, said Khushru Jijina, managing director at Piramal Fund Management.

Piramal would commit an additional amount alongside and co-invest between 25 per cent and 50 per cent of each transaction.

In case of pure equity deals, the ratio would be 25:75, while in the case of structured equity deals, the ratio would be 50:50, he said.

The platform will look at returns of over 20 per cent and a minimum investment of Rs 200 crore and more. Piramal Fund Management will manage the funds on behalf of the tie-up.

"In the Rera (Real Estate Regulation & Development Act), good developers are seeing a lot of opportunities for joint-ventures. They can take equity from us and go for acquisition of projects from distressed developers," Jijina said.

Jijina also said that the tie-up is part of their intent to enter into joint-ventures with global funds and invest from their propbook. It has stopped raising third party funds to facilitate this strategy.

For Ivanhoe, it can be seen as coming back to Indian real estate investing in a way. It had opened an office here earlier but had to shut it down due to a lack of opportunities. Its parent CDPQ has already opened an office here.

The investment focus shall include the Mumbai Metropolitan Region, Delhi (NCR), Bangalore, Pune and Chennai, Piramal said.

Ajay Piramal, chairman, Piramal Enterprises, said, "We are extremely pleased to be partnering with Ivanhoé Cambridge, a global institutional leader of great reputation with a long-term value system and investing philosophy aligned with our own. Given the scale of our existing real estate offering and roster of existing developer relationships, the partnership will enable us to execute on very compelling opportunities to deliver high-quality residential developments in the local markets that we service."

Michael Sabia, president and chief executive officer, CDPQ, said: "India represents a key market for our global growth. We look forward to a long-term and fruitful business relationship with Piramal in the years to come."