RMZ, one of the biggest developers of office space in India, is in discussions with the Qatar Investment Authority which is its existing shareholder and the Canadian Pension Plan Investment Board (CPPIB) for raising close to $1 billion for expanding its overall asset portfolio with acquisitions.
This aggressive capital-raising blueprint is a major driver of the group’s mission to scale up the office rental business to a whopping 60 million sq. ft. over the next 5 years. The Bangalore-headquartered group currently has 21 million sq. ft. under its office rental business. This was confirmed by the Managing Director (executive management) at RMZ, Thirumal Govindraj. Qatar Investment Authority may be providing top-up funds over its $600 million investment, RMZ is in discussions to bring in CPPIB as a new investor as well. According to the company, the plans are to raise around $900 million-$1 billion in equity infusion for fueling future growth. This is possibly the highest single fund-raising initiative taken by any commercial developer in the country till now.
RMZ Infotech (RIPL) owns the business parks and is 50% owned by the Menda family (promoters) and the remainder is equally split between Baring Private Equity Partners India and the Qatar Investment Authority. The Mendas may look at restructuring the shareholding in the company by either replacing the Baring stake with its new investor or by purchasing the Baring stake back. CPPIB may invest in the existing RIPL structure or in a new company being created for owning and developing these upcoming business parks which will be either greenfield or acquired.
These talks are being held independently while RMZ Infotech is in plans to list on the bourses sometime in 2018 as a real estate investment trust or REIT. This unit is expected to garner income close to Rs.1,100 crore in the present fiscal. In case the deal goes through successfully, CPPIB will be following its blueprint of working with several strategic partners in the commercial real estate space in the country. It already has investments with Phoenix Mills, the retail mall operator and Shapoorji Pallonji Group.
RMZ has spent more than $1 billion for acquiring its business parks in Mumbai (from Essar), Hyderabad (50% in the MyHome Industries unit) and Gurgaon (from BPTP) over the last 1 year. The ongoing acquisitions will add close to 15 million sq. ft. to the portfolio at RMZ according to Govindraj. Private equity firms, global pension funds and sovereign wealth managers continue to remain bullish in terms of rent-yielding commercial real estate in the country which is offering one of the highest returns in terms of global asset classes. Already, players like GIC, Blackstone and Brookfield Asset Management have created a huge Indian portfolio, tying up with domestic commercial realty developers across the country.
