Bangalore: The Embassy Group, along with private equity giant Blackstone, is buying one of the largest IT parks in Bangalore, Vrindavan Tech Village (VTV), for Rs 1,951 crore ($356 million), say people in direct knowledge of the deal.
HDFC Property Fund is expected to have 33% equity participation in the buyout, while GIC of Singapore is in talks to pick up 16%. The
Embassy-Blackstone combine will own 51%, leaving the rest with HDFC and GIC once the deal is formally structured.
The acquisition will be funded through a Rs 900-crore debt and an equity infusion of about Rs 1,100 crore by the acquirers. VTV, owned by low-profile investor Vikas Telecom, has a 106-acre land parcel, including an SEZ under development in Bangalore’s IT corridor. The Embassy-Blackstone stake may climb to 66% if the talks with GIC fail.
TOI first reported on this deal in January this year. Spokespersons for Embassy and Blackstone declined to comment. Vikas Telecom could not be reached for comment. Embassy paid a 200-crore advance
Embassy has paid a Rs 200-crore advance after signing an initial agreement following nearly six months of talks. The transaction will eventually be routed through Embassy Office Parks (EOP), an equal joint venture with Blackstone to acquire tenanted office buildings in India. EOP owns a 13.5-million-sqft portfolio, earning Rs 700 crore in rentals annually.
Blackstone has invested almost $1 billion in Indian real estate in the past two years, mostly to acquire office buildings and the residential portfolio of Merrill Lynch in India. Blackstone’s appetite for office buildings is seen as a safe bet, delivering 10-11% returns in India’s volatile real estate market.
VTV has troubles with some of its lenders, including an ongoing arbitration with Citigroup. The transaction is awaiting final advice on its structuring and some reconciliation of accounts.
Embassy wants to use a large part of the land parcel for other mixed-use developments, including a large residential township in partnership with HDFC, said one of the sources cited earlier.
VTV has developed office space of 2.1 million sqft and 75 acres of undeveloped land. Its tenants include Cisco, Sony, Nokia, and Ness Technologies. The acquirers will decide further utilization of available land between office space and other developments depending on the unfolding market potential.