The NY based multinational private equity (PE) firm Blackstone Group is in the process of acquisition of Anand Jain-promoted Urban Infrastructure Opportunities Fund (UIOF) that also counts Reliance Industries as a key investor for nearly Rs 800 cr.
This is going to be a landmark deal as no such private equity secondaries transaction has ever taken place in India. A PE secondaries transaction involves buying and selling of pre-existing investor commitments of private equity and other alternative investment funds.
Blackstone Group has been one of the most aggressive institutional investors in Indian real estate and it has been investing heavily in the country’s growing commercial property market. While it owns the largest office portfolio in India, this transaction will help the firm gain foothold in the country’s residential real estate too. Blackstone is roping in Anuj Puri’s recently formed Anarock Property Consultants as a strategic partner to manage the fund.
Both the entities have almost zeroed in on the structure and terms of the proposed transaction. A final term sheet for the same will be signed with the asset management company. Following this, Blackstone is expected to make an offer to the fund’s investors.
Apart from Reliance Industries, the fund has Anand Jain’s Jai Corp, State Bank of India and Life Insurance Corporation of India and several other institutions as its investors, as per the fund’s website.
The venture capital management company called Urban Infrastructure Venture Capital Ltd (UIVCL) is currently managing the Urban Infrastructure Opportunities Fund (UIOF) and is acting as the Indian advisor for the offshore fund Urban Infrastructure Real Estate Fund (UIREF).
Urban Infrastructure Opportunities Fund had earlier informed its investors that it is in talks with a prospective investor for a takeover of this fund and once finalised, the new investor is likely to make an offer to them to offload their units.
Urban Infrastructure Opportunities Fund was launched in 2006 and it had raised about Rs 2,200 cr. The fund was launched with investments focused on residential development and had a tenure of 9 years, including two extensions of 1 year each. It raised an additional Rs 200 cr through a rights issue to existing unitholders.
With the approval of 75% of its investors, the the fund in 2015 sought the Securities & Exchange Board of India’s approval for a further extension of 18 months. The overall corpus of the fund now stands at around Rs 2,400 cr and it is one of the largest domestic venture capital fund scheme in the real estate sector in India. The fund has so far exited nearly half its investments.
However, weak market conditions hampered both returns as well as the possibility of exit from entire portfolio of assets. A few of its investments are currently under litigation for an exit, while some are being negotiated for an out-of-court settlement. The fund’s investments span across of real estate developers’ Special Purpose Vehicles (SPVs), mainly developing residential projects in the Mumbai suburbs, Bengaluru, Nagpur, Hyderabad, Chandigarh, Nashik, Raipur and Chennai.