Piramal Enterprises Limited (“PEL”) has announced a strategic partnership with Ivanhoé Cambridge, a real estate subsidiary of CDPQ (Caisse de dépôt et placement du Québec), to provide long term equity capital to blue chip residential developers across the five major metro cities in India. Ivanhoé Cambridge is allocating an initial US$250m for this purpose. PEL will commit an additional amount alongside and co-invest between 25% and 50% of each transaction.
There is a strong demand for equity in the capital stack as blue chip real estate developers increasingly prefer the option of partnering with investors in the early stages of the development life cycle over high cost financing. Naturally, the capital will be made available to a selective list of Grade A developers who have already demonstrated a track record of execution capability, corporate governance and strong return potential. The investment focus shall include the Mumbai Metropolitan Region, Delhi (NCR), Bangalore, Pune and Chennai.
Ajay Piramal, Chairman, Piramal Enterprises Limited said, “We are extremely pleased to be partnering with Ivanhoé Cambridge, a global institutional leader of great reputation with a long term value system and investing philosophy aligned with our own. 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 that we service.”
Khushru Jijina, Managing Director, Piramal Fund Management said, “This alliance with Ivanhoé Cambridge is consistent with our philosophy of acting as a perpetual provider of capital and underlines the confidence reposed by institutional investors time and again in our abilities as a fiduciary. We believe that the timing is opportune for the provision of both pure and preferred equity capital at an early stage in the project life cycle. Such equity funding with Tier 1 development partners will enable us to deploy capital over a longer time horizon and facilitate participation in larger projects with the ability to generate returns across real estate cycles.”
Michael Sabia, President and Chief Executive Officer, CDPQ, said: “India represents a key market for our global growth. We look forward to a long-term and fruitful business relationship with Piramal in the years to come.”
Daniel Fournier, Chairman and Chief Executive Officer, Ivanhoé Cambridge said: “We are excited to participate in India’s success story alongside one of India’s leading fund manager. Piramal, with its long experience, impressive track record and strong relationship with India’s top developers, will certainly play a key part in the success of this important investment. India’s compelling demographic and economic fundamentals combined with supportive government policies bode well for a long-term residential development strategy such as this one.”