Private equity (PE) firm Baring Private Equity Partners (BPEP) is investing $100 million (Rs 500 crore) in South India's largest office space builder RMZ Corp. The PE player will back RMZ Corp's acquisition of an office space project of 6 million sq ft in the technology hub of Bangalore.
TOI first reported that RMZ Corp is buying out the 50-acre office development Adarsh Prime Projects in a deal valued at Rs 1,080 crore. The transaction, one of the biggest in the office space segment, involves purchase of 1.4 million square feet of pre-leased space and land with rights to build additional 4.6 million sq ft space.
Baring will pick up 28% stake in the special purpose vehicle (SPV) floated for this buyout, which happens to be one of RMZ's group companies . The remaining stake will be held by RMZ.
The deal with Baring is the second PE transaction for RMZ, which had attracted $350 million funding from AIG Global Real Estate five years ago. RMZ declined to comment, when contacted.
BPEP India, one of the oldest PE firms in the country, manages assets worth over $1 billion. RMZ currently has 6.5 million sq ft of builtup office space across Bangalore , Chennai and Hyderabad . The deal to buyout Adarsh project alone will almost double RMZ's portfolio of office space. Besides, RMZ is also in talks with multiple developers to buyout an additional 5 million sq ft in the three southern cities, which is expected to fructify by 2012-end.
RMZ wants to cash in on the demand for pre-leased office space with many IT/ ITeS companies expanding in the three southern cities. Besides, the family-owned RMZ is exploring a REIT (real estate investment trust) listing of its office assets in the next five years.
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