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IFC, which is an existing investor in the company, will maintain its current stake, post-infusion. However,
the statement did not disclose the stake picked up by Warburg Pincus. "The current round led by
Warburg Pincus is the single largest equity infusion in the company which would double our net worth,"
Sanjay Agarwal, founder and managing director, AU Financiers was quoted as saying.
The company, which also counts Motilal Oswal as one of its institutional investors, has also made a
concerted foray in to the housing finance market, largely in Rajasthan and a few other markets where it
has a presence.
In a previous round of equity funding in 2010, AU Financiers had reportedly raised Rs 55 crore from IFC
and Motilal Oswal's India Business Excellence Fund (IBEF). Global consultancy major Ernst & Young was
the sole financial advisor for the transaction.
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Morgan Stanley invests $90 million in Mumbai project
Morgan Stanley Real Estate Investing, or MSREI, has invested about $90 million (around Rs. 450 crore) in
a project of Sheth Developers Pvt. Ltd primarily to help the real estate firm refinance debt it had taken
to buy land in Mumbai, said two people familiar with the development.
A large residential development is coming up on the 18-acre land in suburban Andheri area. Sheth had
bought the land from Borosil Glass Works for about Rs.875 crore in 2010.
The Sheth transaction is significant for Morgan Stanley, which hadn’t invested in India since November
2007 after it put in about $130 million in Pune-based developer Panchshil Realty.
Overall, Morgan Stanley has invested around $840 million across 10 deals in India so far.
“The Morgan Stanley-Sheth transaction was done in a part-equity, part-debt kind of investment
arrangement,” said one of the two persons mentioned above. “The Borosil land project is coming up
well and sales have been strong. The project will be developed in phases, totally generating revenues of
about Rs.3, 500 crore over a period of four years.”
Text messages sent to senior officials in Sheth Developers were not answered. Private equity (PE) funds
are increasingly bailing out real estate developers from tight situations, including on payments for
expensive land purchases, repayments and refinancing of debt, besides financing project development,
said real estate analysts.
Several developers, especially in Mumbai and the Delhi-National Capital Region, are looking to raise
capital from PE funds for individual projects to reduce the debt component in the project cost.
Bangalore-based RMZ Corp. raised $100 million from Baring Private Equity Partners this year through a
special purpose vehicle (SPV) designed to acquire properties. RMZ has already used a part of the
investment to acquire an office space project of 6 million sq ft. in the city. Raj Menda, managing director
of RMZ, one of the largest office space developers in the country, said the SPV structure helps because it
can receive funding from more than one PE fund. A spokesperson for Baring Private Equity declined to
comment.
In another transaction, in February, Kotak Realty Fund invested Rs.150 crore in an SPV to help Sunteck
Realty Ltd buy land in suburban Mumbai, again in a structured combination of debt and equity. The
money helped the developer buy a 16-acre land parcel for Rs.300 crore.