Blackstone Group LP and its Brazilian sister firm, Patria Investimentos, have reportedly entered into an agreement to buy 70 percent stake in Brazilian luxury property developer Gafisa's residential community developing unit, Alphaville Urbanismo, for $651 million.
According to The Financial Times, this deal is the first venture of Blackstone and Patria together after the former invested in the latter in 2010. The New-York based property firm is purchasing Alphaville in order to maximize its global operations and presence.
Gafisa initially owned 10 percent stake in Alphaville, even though it was the owner of the company. Now, while the new owners will maintain the majority stake, Gafisa will purchase 20 percent stake for $171 million, enabling it to own a total of 30 percent holding in Alphaville, reports Businessweek.
"The transaction will allow our shareholders, through the 30 percent stake in Alphaville, to participate in the long-term value creation we believe will be produced by partnering with two leading investment firms with global and local experience in the real estate sector," Duilio Calciolari, CEO of Gafisa said in the statement.
The transaction is expected to close by the end of the third quarter. Gafisa plans to use the proceeds from the sale to reduce its debt. The company has been struggling with finances for some time now, reports Bloomberg. In April, Gafisa reported a net loss of $27.2 million for the first quarter due to major sales cancellations. Shares of the company have also been underperforming since 2011.
Apparently, the company has started contemplating alternatives to spin off Alphaville since September 2012. Blackstone hopes that the purchase deal will prove to be a profitable venture.
"Alphaville is a well-managed, high-potential Brazilian company, primed to capitalize on the country's increasing growth and development," Jonathan Gray, global head of real estate for Blackstone, said to Bloomberg.
In its global expansion, Blackstone is supposedly buying a business park in the city of Mumbai, India. It also purchased another office property in Southern India in February.
