Ajay Piramal to exit real estate PE firm

Ajay Piramal, the pharma and real estate industrialist who has made a habit of selling and buying companies, plans to exit his real estate private equity and asset management company, Indiareit Fund Advisors, people close to the development said.

The promoter company of Indareit is in talks with international banks and hedge funds, including IL&FS Investment Managers, Blackstone and Kohlberg Kravis & Roberts (KKR), for a possible sale of the domestic private equity fund. The deal could be valued at 600-650 crore, these people said.

“Risk exposure is high in private equity funding . Piramal is keen to concentrate on his realty development business — Piramal Sunteck Realty — a joint venture between the Ajay Piramal Group and Sunteck Realty,” said a senior executive from an asset management company, who did not wish to be named.

An email query sent to Indiareit’s promoter Ajay Piramal did not elicit any response, while managing director Ramesh Jogani refused to comment on the same. Mr Piramal did not take calls on the issue despite repeated attempts.

Piramal’s reason behind exiting the fund and focusing on development stems from the fact that returns in property development are much better. Indiareit currently manages one offshore fund worth $200 million, which has 3i Group as the anchor investor. It also manages two other domestic funds — Indiareit Domestic Fund Scheme I with a corpus of 430 crore and the 537-crore Indiareit Domestic Fund Scheme III.

The company has also raised another local fund of 750 crore — Indiareit Domestic Fund Scheme IV. The real estate-focused private equity fund recently closed Scheme IV. Nearly 70% of its investments are in residential projects, which have been seeing a major comeback in recent times.

Indiareit is promoted by Piramal Enterprises and is led by ex-entrepreneur Jogani, who also has a minority stake in the venture. Since its launch in 2006, it has raised money from domestic and offshore investors, with Piramal as the anchor investor. The private equity fund is also looking at partially exiting four to five projects this year out of its large portfolio of residential projects. One of its major exits will come through the proposed 495-crore IPO of Neptune Enterprise. Indiareit had invested about Rs 208 crore in Neptune. About nine investments have been made by Indiareit Domestic Fund I including Alpha City, Chennai ( 23.8 crore), Amsri Grande, Hyderabad ( 20.3 crore), Paranjape Blueridge, Pune ( 49.5 crore) and Skyline I, Bangalore ( 63 crore.)