Warburg Pincus To Pick Up Minority Stake In Piramal Realty For Rs 1,800 Cr

 

In one of the largest FDI deals in real estate sector in India, an affiliate of Warburg Pincus, the leading global private equity firm focused on growth investing, is going to pay Rs 1,800 crore (S$284 million) for a minority stake in Piramal Realty, the real estate development arm of the $5-billion Piramal Group founded by Ajay Piramal.

 

This is Warburg Pincus’ second investment in the Piramal Group. It has funded Piramal Healthcare in 1997. The Piramal Realty transaction would be Warburg Pincus’ first major investment in real estate in India.

 

Founded in 2011, Piramal Realty is a Mumbai-based developer that has over 10 million square feet under development in prime areas of Byculla, Thane, Worli, BKC and Mulund. 

 

The company made its first big-ticket acquisition in 2011, when it bought the Mafatlal mill land in Byculla for about Rs 605 crore. However, it has not launched any project so far.

 

Commenting on the transaction, Anand Piramal, Piramal Group's Executive Director, said "We are proud to partner with one of the world's leading private equity firms to build India’s most admired real estate company, admired not just for its scale and profitability, but also for its impact on the lives of its customers and the progress of our country.” The capital raised will be used to expand Piramal Realty’s portfolio and acquire marquee land parcels in and around Mumbai.

 

Niten Malhan, Co-Head of India, Warburg Pincus said: “Warburg Pincus invests in companies with high growth potential and believes that Piramal Realty is best positioned to achieve leadership in one of the world's most attractive real estate markets. Piramal Group's strengths such as its strong values, its track record of creating long term value for stakeholders, its trusted brand, its ability to recruit great people, its emphasis on customer centricity and its reputation as strong deal makers are some of the reasons why the firm chose to invest in Piramal Realty.“

 

Ajay Piramal, Chairman, Piramal Group added, “We are delighted to partner with Warburg Pincus for a second time: the first was when they invested in Piramal Healthcare in 1997, and now with Piramal Realty. Warburg Pincus’ investment and expertise will raise the level of real estate in India to international standards, as it has done in other industries such as telecom, financial services and pharmaceuticals.” 

 

Warburg Pincus' past and current investments in India include Ambuja Cements, Au Financiers, Bharti Airtel, Dainik Bhaskar, Diligent Power, Capital First, Gangavaram Port, Havells, HDFC, Kotak Mahindra Bank, Kalyan Jewellers, Lemontree Hotels, Max India, Metropolis Healthcare, Piramal Healthcare, and Sintex.

 

The Piramal Realty board includes Deepak Parekh (Chairman, HDFC), Nitin Nohria (Dean, Harvard Business School), Robert Booth (former CEO, EMAAR) and Subbu Narayanswamy (Director, Real Estate/Infrastructure practice, McKinsey).