Piramal, Canadian company may form $250-mn realty JV

Ivanhoe Cambridge, the real estate arm of Canada’s second largest pension fund manager CDPQ, is looking to re-enter Indian real estate with a joint venture with Ajay Piramal’s Piramal Fund Management, said a source in the know.

Both the partners are planning to set up a $250-million JV, which will provide equity capital to developers of residential projects, the source added.

“Currently, the documentation is on and the deal is expected to be signed within a month.”  When contacted, an Ivanhoe Cambridge spokesperson said: “Ivanhoé Cambridge is actively seeking investment opportunities in Indian real estate. We do not comment on speculations in the market.”

RE-ENTERING INDIA
  • Ivanhoe Cambridge first entered India in 2008 but shut office later

     
  • Piramal has a $500-mn JV with CPPIB to give debt to realtors

     
  • Ivanhoe, Piramal JV to give equity to developers

     
  • Ivanhoe's parent CDPQ opened office early this year

     
  • It appointed World Bank executive Anita Marangoly George as South Asia head

A Piramal spokesperson said: “We would like to clarify the company from time to time explores various investment opportunities as part of its routine business. This evaluation of opportunities includes various criteria, including technical, financial, taxation, commercial, regulatory and legal. Once these criteria are met, it is followed by internal approvals at various levels, after which comes a comprehensive financial and legal diligence. Investments are made only in those projects that come out of this filtration process and have been approved by the board or its duly empowered Committee. Any disclosure prior to this would only be speculative.”

Interestingly, Ivanhoe Cambridge opened an office in the country in 2008 to invest in Indian malls and shopping centres, but shut it as it could not find the right opportunities.

“When it entered India last time, the market was down. But after the Narendra Modi government came to power, things are looking up,” said a senior real estate executive who did not wish to be named.

Ivanhoe Cambridge held CAD55 billion in total assets as on December 31, 2015.

Its parent CDPQ already opened its India office earlier this year and appointed World Bank executive Anita Marangoly George as South Asia head. It has committed Rs 1,000 crore for Indian energy sector.

Canada Pension Plan Investment Board (CPPIB), Canada’s largest pension fund manager, has opened its office here and invested $3 billion so far, which includes real estate.

The new joint venture would help Piramal to take exposure to both debt and equity needs of developers, a source said.

Piramal already has a $500-million JV with CPPIB for lending to housing projects in major cities.

Last year, Piramal Enterprises announced a partnership with Dutch pension fund manager APG Asset Management, where each would invest $1 billion in Indian infrastructure projects over three years.

“We are seeing a big demand for pure equity and preferred equity. We have already started giving this combination to developers. To scale it up, we will tie up with a sovereign fund or a pension fund,” said Khushru Jijina, managing director of Piramal Fund Management, in an interview with this paper last October.

To facilitate the new JV plan, Piramal has deferred raising of new third-party funds in the segment. It had planned a new domestic real estate fund in the housing segment with a corpus of Rs 700 crore, to invest in both redevelopment projects and land acquisition by developers.

CPPIB also tied up with Shapoorji Pallonji to invest in office projects.

Peninsula Land, part of the Ashok Piramal Group, and Canada-based Brookfield Asset Management have announced a 50:50 joint venture to launch a domestic real estate fund.


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