Panchshil Realty buys back PE firms’ stakes in 3 projects for over Rs 720 cr
Pune-based Panchshil Realty has bought back private equity firms Merrill Lynch and IREO’s stakes in three of its projects for over Rs 720 crore, at least three persons familiar with the development said.Panchshil has acquired IREO’s 50% stake in two projects – EON SEZ at Kharadi and a high-end residential project at Hadapsar for Rs 480 crore. These transactions have been executed through its subsidiaries Eon Kharadi Infrastructure and Eon Hadapsar Infrastructure.During late 2005, IREO Real Estate, the first organised private equity fund for India’s real estate sector, had invested Rs 180 crore for a 50% stake each in these two projects. Of the total 4 million square feet development at EON Special Economic Zone, around 3 million sq ft is ready and has been leased out.
IREO clocked in a return of about 2.7 times on its initial investments. Panchshil arranged for this funding with a mix of internal accruals and debt arranged by Standard Chartered Bank, the sources said. Panchshil has also paid Bank of America-Merrill Lynch Rs 300 crore as exit price and Rs 60 crore as dividend to exit from its IT park project at Yerwada in Pune.
The 1.5-mllion-sq-ft IT park, in which the then Merrill Lynch had picked 50% stake for Rs 205 crore, is operational. In 2005, in one of the first FDI investments in the real estate sector in India, the two private equity firms had invested a total Rs 345 crore in three of Panchshil’s projects in Pune, including a technology park, an SEZ and a high-end residential project. They are exiting the projects with a record over 100% return on investment in seven years.
Both IREO India vice-chairman Lalit Goyal and Panchshil Realty’s chairman and CEO Atul Chordia declined to comment on the transactions. An email query sent to Blackstone, the investment manager for Bank of America-Merrill Lynch’s real estate portfolio, did not elicit any response.
Panchshil has so far built and delivered over 10 million sq ft space, and currently has around 20 million sq ft under development. Apart from IREO and Merrill Lynch’s investments, Xander Group has invested around Rs 500 crore in Panchshil’s hospitality business, while Morgan Stanley has invested over 700 crore in the group at entity level.