| Janapriya Engineers Syndicate, a closely held firm credited with building 21,000 units in the affordable home segment in its 20 years of existence, is planning to divest 25 per cent equity to a US-based privately-held real estate private equity company, which is making its maiden entry into India. |
| The offer of stake translates to around $40 million (over Rs 150 crore). The deal is expected to be finalised by next month, according to Janapriya officials. |
| “We have decided to limit our offer to 25 per cent at this stage though the American firm was keen to hold much higher equity in the company,” K Ravinder Reddy, chairman & managing director, said. |
| There has been a growing interest in the Hyderabad-based realty and infrastructure companies among overseas private equity firms in recent times. US-based Citi Venture Capital International (CVC) had recently invested Rs 150 crore in Indu Projects. |
| Similarly, city-based Ramky Infrastructure received Rs 125 crore investment from UAE-based Sabre-Abraaj Private Equity Fund and IL&FS Investment Managers, which together picked up 13.5 per cent equity in the company this year. |
| The Hyderabad-based firm’s move signifies its transformation on the cards in terms scale and corporate practices from the present low-profile, one-project-at-a time business model. |
| The company has been valued at around Rs 600 crore minus its rent yielding assets, primarily based on the housing projects on hand for the next two years, the officials said. |
| “Both the entities have synergies in their approach and focus with regard to affordable housing projects. The US company had approached us mainly on account of our focus on affordable homes business besides our experience and practices,” C Srinivas, chief financial officer, Janapriya Engineers Syndicate, said. |
| Though Janapriya did not wish to identify the US company at this stage, it however confirmed the completion of financial due diligence by a global consultancy firm appointed by the latter. The American firm is said to have so far raised three private equity funds and invested over $ 600 million in a dozen portfolio companies outside the US. |
| Janapriya has built about 2.1 million sft in the home segment so far and is going for groundbreaking of projects with a combined built-up area of 15 million sft alone this year consisting of 8 projects worth over Rs 500 crore in Hyderabad and Bangalore, K Kranti Kiran Reddy, executive director of the company, said. |
| The company hopes to achieve Rs 300 crore turnover during the current year compared with Rs 120 crore last year and plans to scale it up at Rs 800 crore next year with the execution of multiple projects simultaneously, backed by the infusion of funds from the stake sale. It proposes to raise a debt of Rs 300 crore for these projects. |
| “We are targeting to achieve 1,600 crore turnover by the year 2009-10 that is when the company wants to go public,” Srinivas said. |
Source: Business Standard