IL&FS seals deal in Rs. 2,126cr realty project

In a significant move, the IL&FS Investment Managers, which is the country's only listed private equity fund, has acquired 9.4% stakes in Indiabulls' currently developing the 8.3-acre Bharat Mills plot in south central Mumbai involving an investment of Rs. 200cr with a value worth Rs. 2,126cr. The equity deal also assumes significance in the backdrop of most private equity deals into realty sector taking route of structured and mezzanine finance given the sluggish scenario prevailing in the real estate sector. The project is a unique asset for the company in terms of size and location and will fetch superior returns. Indiabulls realty will undertake the investment through its second realty fund worth $895 million and transaction will mark total deployment of this fund raised couple of years ago, said Chief Executive Officer, Vipul Bansal.

It may be recalled that in August 2010, the developer had acquired Bharat Mills for 1,580cr by outbidding Lodha Developers in an e-auction conducted by National Textiles Corporation. The transaction values of the proposed high-end residential and commercial project on a land parcel at over Rs. 2,100cr, nearly 35% premium to the price paid by the developer in 2010. The valuation of the project through this transaction also defies the current and future oversupply estimated for central Mumbai including Lower Parel, Worli and Prabhdevi. Indiabulls Real Estate itself has developed the property in question and is in the process of constructing total 3 million sq ft at Jupiter Mills and Elphinstone Mills at Lower Parel.