HDFC fund to invest Rs 138 cr in Vascon

HDFC India Real Estate Fund (HIREF) will invest Rs 138.5 crore in Pune-based Vascon Engineers. R Vasudevan, chairman and managing director Vascon, told Business Standard that the company and HIREF have signed a definitive agreement for the investment.

He, however, did not disclose the percentage stake Vascon has offered HIREF. "It's a small stake we have offered them," was all Vasudevan would say.

This is HIREF's second investment in as many days. On Tuesday, HIREF had announced Rs 95 crore investment in L&T Urban Infrastructure Venture.

The investment in Vascon works out to 13.8 per cent of the corpus of Rs 1,000 crore which HIREF has garnered from its privately placed new fund offering last year.

The fund is managed by HDFC Venture Capital Ltd, in which State Bank of India has 19.5 per cent shareholding apart from HDFC Ltd. HIREF has received subscription from domestic institutions and high networth individuals.

The scheme had a minimum contribution of Rs 5 crore per investor, with HDFC and SBI having contributed Rs 100 crore and Rs 200 crore respectively.

"The investment is a result of the over 15-year old relationship we have with the HDFC group. This will strengthen our relations as business partners," Vasudevan said.

The investment, he said, would help the company identify more opportunities in terms of property development as the current market trend is in favour of leased ready-to-occupy properties or custom built, yet leased, properties. "The funds will be deployed for buying land and in construction work," he added.

Vasudevan said the company was also in discussion with yet another investor for offering an equity stake. "It could be a financial institution," he hinted without disclosing the name. The investment will come within the next three months, he added.

Reacting to a question about the present equity investment coming from a fund which is a seven-year close ended one, Vasudevan said the agreement has provided for an exit route for the investors in a shorter time than seven years. "It may be in the form of an initial public offer from us," he explained.

Vascon, the Rs 450 crore company founded by R Vasudevan in 1986 is a premier real estate developer and engineering and construction contractor. It has 11 million sq ft of area under development including the 1 million sq ft Vascon-Weikfield IT Citi Park and Hyatt Hotel in Pune.

The company has operations in Mumbai, Goa and Himachal Pradesh.

In the 20 years of its existence Vascon has successfully completed more than 100 prestigious projects, covering 6 million sq ft for residential, commercial, industrial and pharma companies.