Century Real Estate, a large privately-held real estate developer in the Garden City, is understood to be in advanced discussions to buy at least half the investment from Fortress Capital, a global private equity fund that had invested about $100 million in 2007.
According to investment bankers close to Century, Fortress had invested through convertible instruments. It has now indicated plans to convert half of its investment.
It would want the rest back with 16-18 per cent returns.
The 1973-founded Century is one of the largest land-bank owners in Bangalore. With close to 2,000 acres under its belt, worth close to $2 billion, Century has been on a diversification drive during the past five years.
It had embarked into developing various commercial and residential properties, thus positioning itself as a full-service real estate development company. As part of this drive, Century was among the very few realty players in India that had raised close to $300 million during the global economic slowdown of 2007-08 from Fortress Capital and Goldman Sachs at the enterprise and the special purpose vehicle levels, respectively.
Investment bankers further added Century has close to four months to finalise plans on how they intend to buy back a part of the investment from Fortress. “They are discussing on how much they will be able to buy back and at what rate of return,” a banker told Business Standard. The management of Century offered no comment on the transaction.
According to information available, Century has been trying to tap the NCD (non-convertible debenture) route to raise resources to pay back part of the investment from Fortress — and has been partially successful. It is also likely that they will be able to finalise another tranche of NCD within this month. The company had earlier raised around Rs 100 crore through this route early this year, while another Rs 250 crore was raised during last year.
Founded by Dayanand Pai, Century is in the process of launching seven projects with a built-up area of 1.7 million square feet. With the launch of these projects, Century will have added over 1,500 apartments to its inventory of 1,200 apartments. The company has nine ongoing projects with a total built-up area of 1.2 million square feet in various parts of Bangalore, and has a development portfolio of 10 million square feet.