European financial powerhouse Deutsche Bank (DB) is set to invest $125 million in Bangalore-based Golden Gate Properties (GGPL) for a 15-20% stake.
It is believed that Deutsche Bank has emerged as the front-runner in a fund-raising process kicked off by the southern realty player about a year ago. Sources said the initial agreement has been inked even though the deal is not yet closed. Other players in the fray included Credit Suisse and ABN Amro.
The transaction, according to sources, is likely to value GGPL at around Rs 2,700-3,000 crore. The company, still ranked among the Tier-II real estate developers, has sizeable land bank in Bangalore, Hyderabad, Mysore and Bangalore. The company currently has seven ongoing projects worth Rs 1,500 crore. GGPL’s top management was not available for comment.
The impending transaction will be Deutsche Bank’s first entity level investment in the Indian real estate sector. Its two other significant investments were into specific FDI complaint projects. It recently infused Rs 500 crore for a 5% stake in Hindustan Construction Company’s Lavasa project near Pune. The deal valued Lavasa Corporation at Rs 10,000 crore.
Earlier, DB invested around Rs 1,700 crore for around 25% stake in special purpose vehicle (SPV) floated by Mumbai-based Lodha group. This SPV proposes to set up three FDI-compliant real estate projects over 70 acres in Thane and Dahisar. Notwithstanding the sub-prime crisis in the US, DB and its global peers like JP Morgan, Credit Suisse and ABN Amro are on the prowl for investments in India’s real estate sector.
In fact, sectoral analysts say some of these funds are hedging their portfolio on emerging markets like India. Last week, Citigroup agreed to invest $250 million into another Bangalore-based firm Nitesh Estates, marking the American giant’s biggest hospitality linked real estate play yet in India.
Source: Economic Times