Tata Opportunities Fund, the private equity fund of Tata Capital Ltd., on Wednesday, announced its investment of Rs.468 crore ($80 million) in real estate developer Shriram Properties Private Ltd.
The investment, which, according to a release, was only the second such being made by the Fund outside the Tata group, is towards an undisclosed equity stake the Shriram Group is shedding in Shriram Properties. The Fund has been invited to nominate persons for appointment to the board of Shriram Properties.
For the real estate developer, it is a significant investment coming ahead of the IPO, which, the release said, will be “in the near future.”
Stating that the development gives a great sense of accomplishment, Shriram Properties Managing Director M. Murali said Tata Opportunities Fund’s investment would be a big advantage when the company tapped the primary market. On the transaction, he declined to share more information but said the deal was for a minority stake. Apart from the Tata Fund, TPG, Walton Street Capital and Starwood Capital were the other ‘bulky, high quality partners’ that had invested in the company. Noting that the IPO would be launched ‘at an appropriate time’, he said the investment by the Fund was a testimony to Shriram Properties’ track record and work.
For the Shriram group, this is the second major investment in recent times. In April, Piramal Enterprises entered into an agreement with the group to acquire 20 per cent equity stake in financial services company Shriram Capital for Rs.2,014 crore. In May, 2013, Piramal had invested over Rs.1,600 crore for getting a 9.9 per cent stake in Shriram Transport Finance Company.
Tata Opportunities Fund has consummated its second investment outside of the Tata group taking its total commitments to almost 50 per cent of the Fund. The prior investments have been into Ginger Hotels, Tata Sky and auto component company Varroc Engineering.
Tata Opportunities Fund Managing Partner Padmanabh Sinha said the residential real estate market, particularly mid-market housing, should see high growth on the back of increasing urbanisation and an up-turn in the economy.