Alok Industries, the Rs 2,200-crore Mumbai-based textile firm, has resumed talks with private equity players to dilute about 20% equity it owns in its unlisted unit, Alok Infrastructure. A realty company, Alok Infrastructure has been looking at options to raise around Rs 600 crore for developing its large land bank, said sources.
“We are working out different options and strategies for our realty venture and something will happen before August. I am not in a position to divulge anything more now,” he told ET from London. Ernst & Young is advising Alok Industries on the equity dilution in Alok Infrastructure.
Alok Industries had initiated talks with private equity firms in October last year, but had to discontinue after crashes in the stock marketsled to a steep correction in valuations. According to analysts, Alok could be looking at increasing the valuation of the realty company through a private equity deal and subsequently list it.
Alok Infrastructure plans to invest large amounts in real estate development and is also developing over 180 acres in its textile SEZ in Silvassa. It has already acquired 220 acres at Silvassa. The company has also acquired 130 acres at Panvel at the rate of Rs 25 lakh per acre in a 50-50 joint venture.
Earlier, Alok had acquired office premises of around 575,000 sq ft at Lower Parel in Mumbai, in the Peninsula Business Park office complex, which is currently being developed by Peninsula Land Holdings. The company had also bought about 57,000 sq ft of office premises at Ashford Centre in Lower Parel, for Rs 18,000 per sq ft.
According to India Real Estate Sector report Global Research, the Indian real estate market is expected to grow at a CAGR of 20%, driven by an 18-19% growth in residential real estate, 55-60% in retail real estate, and 20-22% in commercial real estate, over the next five years.
The size in terms of total economic value of real estate development activity of the Indian real estate market is $40-45 billion (5-6% of the GDP), of which residential forms 90-95% of the market, commercial segment is a distant second with 4-5% of the market, and organised retail 1% of the market.