In one of the biggest foreign direct investments in India's real estate sector, New York private equity firm Warburg Pincus is set to invest $284 million in Piramal Realty.
Piramal Realty is the real estate development arm of the Piramal Group, a Mumbai-based business conglomerate owned by billionaire Ajay Piramal, stated Forbes. The company's interests spans over various industries, such as pharma, glass manufacturing, financial services and real estate. Piramal Realty's portfolio includes over 10 million square feet of prime land in Mumbai, such as Bandra Kurla Complex, Worli and Byculla.
In the report, Forbes noted that Warburg's investment is unlike other private equity transactions, whose investments are in Special Purpose Vehicles set up for specific projects. The New York firm instead opted to place a minority stake in Piramal Realty. Executive director of the Piramal Group, Anand Piramal said: "If India is to be the world's second or third-largest economy in our lifetime, the moment is ripe to create a real estate leader in a market where there is none, and Warburg Pincus sees that."
Forbes also mentioned the slowdown of India's real estate sector over the years. This is attributed to the lack of clear policy, funding challenges, slowed demand and delayed government clearances, particularly in the residential market. Anand views this as an opportunity, stating that although the market is "soft," this would be an opportune time for "players like us, who have the holding power, to buy assets." He also noted that the sector is at the bottom of the cycle and trending upward from here on.
Meanwhile, Warburg's investment will be used as a capital to further expand Piramal Realty's portfolio, reports Business Standard. The company plans to purchase land parcels in and around Mumbai. Ajay Piramal, chairman of the Piramal Group, said that Warburg's investments and expertise will help to raise India's real estate levels to international standards.
This is will be the first time that Warburg Pincus will invest in the real estate sector. The company's previous investments are mostly in India's financial service and e-commerce sectors.