Embassy Group in talks with PEs to raise $300 mn

BANGALORE / MUMBAI: Real estate major Embassy Group is in talks with Citigroup private equity amongst others for raising $300 million, as its real estate investment trust (REIT) listing plans in Singapore faces inordinate delays on account of deteriorating markets and regulatory hurdles. Sources said Embassy would look at raising the cash through multiple special purpose vehicles (SPVs). The real estate arm of Citigroup PE was in advanced talks to invest $100 million into one of the proposed SPVs, sources added.

Embassy, which has steered clear of a market awashed with private equity deals, is also now raising another tranche of $200 million through 2-3 more SPVs. The development comes as Embassy’s plans of raising $150 million through a REIT-like vehicle on SGX is delayed, with no definite timeframe in sight given the choppy market conditions.

Embassy had roped in UBS and Goldman Sachs for REIT listing on SGX, and was spinning off some of its assets into a trust structure. Sources said one of the main assets in the trust would have been the 11 million sq ft Manyata Tech Park in the outskirts of Bangalore.

Meanwhile, a banking source said the asset may have been already hived off into a fund like structure controlled by an NRI group raising some liquidity in the interim. The group has some of Bangalore’s most famous landmarks like Embassy Golf Links in its portfolio, but a REIT listing requires assets that are still under development or incomplete.

REIT allows foreign investors to trade in Indian realty assets as domesrtic regulators curb them from owning properties which they don’t occupy. While REITs are still to develop in India, there are several grey areas in way of an Indian company going for REIT listing.

Besides, Singapore’s turbulent market stock market is expected to delay the REIT plans of other realty players like DLF, India Bulls and Unitech. Last year, Ascendas, a provider of business space solutions, listed a REIT involving IT business parks across four Indian cities raising around $160 million.