Piramal shelves plans to sell Indiareit

Billionaire Ajay Piramal has shelved plans to sell his property fund management company, Indiareit Fund Advisors, to Religare Enterprises, according to two persons familiar with the matter.

Religare, promoted by billionaire brothers Malvinder and Shivinder Mohan Singh, was in talks with Piramal for six to eight months to buy nearly 80 per cent in Indiareit for around Rs 300 crore. Though both the parties had signed the term sheet, it was non-binding, one of the sources said.

Indiareit manages funds worth Rs 3,000 crore in domestic and offshore markets. “Earlier there was a thinking in (Ajay) Piramal’s mind that the group should focus on property development and exit the third-party fund management business. Now, he wants to focus on both,” said the second source.

Religare was looking at a foray into the realty fund management space with the acquisition, he said. “Now, it has to look for some other acquisition or start the business in-house.” Calls made to Ajay Piramal did not elicit any response, while Piramal Enterprises did not reply to emails.

A spokesperson at Religare did not answer queries about the company’s talks with Piramal. On the company’s asset management business strategy, he said, “Religare proposes to create a global asset management business platform (RGAM) by acquiring best of breed players (affiliates) with proven capabilities across various asset classes. The target is to acquire 51-75 per cent stakes and build a large global asset management platform, comprising 8-12 affiliates, and list RGAM in five years and create liquidity and value for Religare and minority shareholders.”

Indiareit plans to launch debt and rental yield funds soon, as bank funds for real estate developers are drying up. The fund manager is also getting into joint development in Bangalore and redevelopment of projects in Mumbai.

The debt fund will have a corpus of Rs 500 crore and Indiareit expects returns of 15 to 16 per cent from it. Apart from capital appreciation, the Rs 400-500-crore rental yield fund will solicit fixed returns of 10 to 11 per cent. Last year, Indiareit had raised around Rs 900 crore from domestic investors and was selected by London-listed Trinity Capital as the fund manager of its India portfolio, excluding the listed entities.

After selling off his domestic formulations business and diagnostic centers in quick succession last year, Piramal was planning to exit Indiareit to focus on his property development venture.

Piramal has two property development ventures — Piramal Suntech, a joint venture with Suntech Realty, and Piramal Realty. Piramal is planning to build townships in Hyderabad and Jaipur, where the group has a big land bank.

“We are talking to real estate developers to form joint ventures on the lines of Piramal Suntech,” Piramal had said in an earlier interaction with Business Standard.