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Sunday, January 6, 2008

FIs pick up 10% in Piramal arm Peninsula Land

MUMBAI: Foreign investors such as Franklin Templeton, HSBC, ABN Amro have picked up around 10% stake in the Ashok Piramal group’s real estate arm, Peninsula Land (PLL) for Rs 525 crore.

The new equity holders purchased PLL stake through a qualified institutional placement (QIP) route. The deal values the Ashok Piramal group company at just over Rs 5,000 crore.

The transaction is expected to cut the promoter holding in Peninsula to 52.54% from 62.3%. UBS Capital and Enam Capital advised the company on the transaction.

PLL executives said that the money will be used for land acquisition and construction of new projects. PLL was among the first companies to use old Mumbai textile mill land to enter the property development business, a move which has triggered a frenzy of mall building and corporate high-rises in that part of Mumbai.

PLL now owns around 32 million sq.ft of land and has already developed 5.5 million sq.ft in the Mumbai market alone. PLL has also extended its presence in other markets such as Hyderabad, Pune, and Goa. PLL develops residential projects under the brand name Ashok and operates under the PLL brand for office space projects.

The Indian real estate market is growing rapidly and thanks to a booming economy, surging demand for corporate space and a similar appetite for homes. Heavy investment by global funds and expansion plans of companies has driven up land values and caused fears of a bubble.

PLL is also forming a joint venture with global investment major Lehman Brothers to set up a Rs 750 crore property investment fund. Lehman will invest Rs 500 crore and hold 75% while Peninsula Land will hold the remaining. The fund will invest in PLL’s upcoming real estate projects.

Rajeev Piramal, vice chairman and managing director, PLL declined to comment on the JV. Recently, Peninsula had floated announced two other real estate funds, a Rs 450 crore domestic fund under the name Indigo and $350 million international fund under the name Paramount.