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Shriram Properties, part of the diversified conglomerate Shriram Group, is eyeing acquisition of stressed real estate assets, primarily in South India.
The company has recently acquired three properties in Bengaluru – with 200-250 units in each – is eyeing more such projects.
According to M Murali, Managing Director, Shriram Properties, demonetisation, roll-out of GST and implementation of RERA has lead to a consolidation in the real estate market. As a result, highly leveraged smaller developers or ones who do not have deep pockets, have started looking for exit routes and sell out (of their projects).
While, Bengaluru, Chennai and Hyderabad remain the key real estate markets, the company is also open to acquisitions in other southern regions.
“On an average, there is one developer – mostly smaller or local ones – approaching us everyday with an offer for sell-out. Over the last three months, we may have met some 100-odd developers and their projects,” he told BusinessLine .
According to Murali, it could be an outright acquisition or a joint development or setting up of an SPV depending on the nature of the deal.
However, acquisition of stressed assets does not mean acquisition of debt and other liabilities. “Only clean assets will make the cut. So out of 100-odd offers, 20 may be looked at,” he said.
Fund raising
The Bengaluru-headquarted company, has also earmarked a corpus of ₹1,000 crore, primarily for these acquisitions. A part of the corpus will also go towards development of new properties.
This apart, Shriram Properties is also mulling an IPO. The fund raising could be done by the end of this calendar year. Murali, however, did not share details saying that the proposal is still in the works.
Kolkata project
Despite its appetite for acquisitions and scope of expansion in other markets, the company will not look at entering North or West Indian markets.
Shriram Properties has a portfolio of nearly 50 million sq feet with projects (commercial and residential) in Bengaluru, Chennai, Coimbatore and Vizag.
This apart, it has a township project – Shriram Grand City – coming up near Kolkata.
Located in Uttarpara, some 40 km from the city, Shriram Grand City will have residential units, commercial space, educational institutions, hospitals and IT projects within a 390-acre campus.
Work on phase-1, coming up at an estimated cost of ₹650 crore, is expected to be completed in four years.
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