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DivyaSree set to embark on another fund raise of $100 million

Raghuvir Badrinath  |  Bangalore 

Has appetite to buy back TPG-Axon investment of $100 million

DivyaSree Developers, a realty developer based in Bangalore, is embarking on another major round of fund raise through which the company is looking to raise as much as $100 million during the next four years at project level. The first tranche of $30 million is expected to raised during early next year.

Bhaskar Raju, executive director, DivyaSree Developers told Business Standard they have started talking to few private equity funds to raise the first tranche and subsequently they plan to raise in rounds of $20 million each thereon.

The company, which has a topline of Rs 1,000 crore, parallely is understood to have been gearing for an eventual exit of TPG-Axon, a global private equity fund which had invested $100 million during 2007 at the enterprise level. “We have a good relationship with TPG-Axon and they have helped us scale during the past four years. There has been no direct talk about TPG-Axon exiting their investment with us. However, as a private equity fund, they will plan an exit and as and when it happens, we certainly have the appetite to buy back their investment. Having said that, if we go for a total buyback, it will tie up funds for my growth. So we plan to buy half their stake and rest may be taken up by another private equity player,” Raju detailed. Investment bankers who are close to DivyaSree said that TPG-Axon investment will be worth upwards of $175 million at the current juncture.

“The period between 2005 and 2008 saw a number of institutional investments by both domestic and international funds into Indian real estate,” said Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India, a real estate advisory firm. “Most of these PE funds were calibrated to fund cycles between 5 to 7 years, which is more or less the typical inception-to-completion-cycle of a project. We are now at a stage where many of these private equity funds are monetizing their investments. This constitutes the exit phase, and the pivotal concept here is successful, optimally profitable exits.”

According to recent report by Jones Lang LaSalle on private equity exits in the Indian real estate sector, Indian real estate investors have returned close to 23 per cent of the capital invested as compared to the global scenario, where the distributions by real estate private equity funds of 2006-07 vintage have been approx. 4.5 per cent of the capital called. “This indicates that Indian real estate performance has been to some extent less effected,” the report said.

DivyaSree Developers, has been one of the strong players in the commercial development in South India market and is currently embarking to expand its presence in the residential segment. DivyaSree has raised private equity funds from Kotak Group for one such residential township spread over 137 acres in Chennai.



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First Published: Thu, December 22 2011. 16:57 IST