Piramal Ties Up With Canadian Pension Fund To Invest In Real Estate
Piramal-Ivanhoe Cambridge private equity fund to invest in residential realty in 5 metros.
Piramal Enterprises Ltd. has tied up with the real estate arm of Canada’s second largest pension fund to provide long-term equity funding to developers of residential properties in top five metros, the Indian company said in a statement.
Ivanhoe Cambridge, a subsidiary of Caisse de dépôt et placement du Québec (CDPQ), will initially invest $250 million in a private equity fund jointly floated by the two companies, according to the statement.
Billionaire Ajay Piramal, chairman of Piramal Enterprises, told BloombergQuint that the tie-up can open up a suite of products for the company, such as construction finance, funding residential apartments and housing finance companies.
The company will decide investments on a project basis, largely by holding a stake of anywhere between 25 percent and 50 percent.
Khushru Jijina, managing director, Piramal Fund Management said if a project is based out of pure equity, then Ivanhoe will invest 75 percent while Piramal will have to put in 25 percent.
In structured equity, out of every Rs 100, Rs 50 will be put by them (Ivanhoe) and Rs 50 by us. But the major focus is on pure equity.Khushru Jijina, Managing Director, Piramal Fund Management
Piramal said that the company will approach those developers who have proved their mettle previously since customers would also rely on reputed developers.
Given the scale of our existing real estate offering and roster of existing developer relationships, the partnership will enable us to execute on very compelling opportunities to deliver high-quality residential developments in the local markets we serve.Ajay Piramal, Chairman, Piramal Enterprises
The investment focus will be metro cities, including Mumbai Metropolitan Region, Delhi-National Capital Region, Bangalore, Pune, and Chennai.
The company is looking at getting a return on equity of 20-25 percent, Piramal said. The company’s real estate loan book stands at Rs 35,000 crore, he said.
Jijina clarified that the equity will be clearly on project level in the residential category, not in commercial while the minimum ticket size could be Rs 200 crore.
“Ivanhoe Cambridge didn’t come to India for $250 million. It will be more than a billion dollar investment,” he said.