Shriram Properties reworking Rs 540-cr deal with Ascendas

Plans to add more assets to take transaction value to Rs 810 cr

Shriram Properties, the Bangalore-based realty arm of the Shriram Group, is reworking its proposed  Rs 543 crore ($100-million) deal with Singapore-headquartered Ascendas, which specialises in technology parks.

Shriram Properties has been in discussions since July 2012 with Ascendas to sell its 1.3 million sq ft information technology (IT) special economic zone (SEZ) in Chennai for $100 million. The company is now working to overhaul the transaction to include a few more residential and commercial assets so that the deal value scales up to Rs 814 crore ($150 million).

According to senior officials of Shriram Properties, the company is going slow as there is a lot of interest from investors if the basket is widened. "Some of the investors indicated they would want to hold more assets as part of this transaction and hence, we are looking at including a few more of our assets and we are looking at a target of raising Rs 700 crore from this step," M Murali, managing director, Shriram Properties, told Business Standard.

It is understood that Shriram Properties may use a part of the proceeds to settle its long-pending Rs 600 crore debt, which was raised from German bank Hypo Real Estate Group during late 2007.  

Shriram Properties, on an annualised revenue of close to Rs 700 crore, works on an operating margin of around 23 per cent. It has been strong in the residential segment in south India and looking at aggresively growing its commercial properties over the past few years.

The SEZ - IT park has the potential to develop 3.2 million sq ft on the 58-acre land parcel, which Shriram Properties brought from Standard Motors in 2006.

Most probably, global private equity funds such MapleTree (owned by Temasek), Tishmen Speyer and also Ascendas may look at this asset as and when there is clarity to what extent Shriram Properties will expand their basket, two investment bankers in the know told Business Standard. Shriram Group officials, however, declined to comment on potential investors and what will be the other assets to be included in a fresh transaction.

Along with this deal, which has been in the making for the past 10 months, Shriram Properties is working on another PE transaction to raise as much as $100 million for a clutch of projects.

It had earlier raised PE funding from marquee global investors such as Walton Street Capital, Starwood Capital Group and Sun Apollo for investments in property development.

Shriram Properties has delivered over 8.36 million sq ft of built-up space, with 12.61 million sq ft to be delivered and 45.85 million sq ft under development across Bangalore, Chennai, Coimbatore, Visakhapatnam and Kolkata among others. The company is also involved in developing a 20-million-sq-ft integrated project  at an investment of Rs 5,000 crore in Kolkatta on a land which previously belonged to Hindustan Motors.