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Shapoorji Pallonji, New Vernon to sell stakes in 3 IT parks

Sobia Khan, Bangalore, The Economic Times

May 12, 2012


Shapoorji Pallonji Real Estate and PE fund New Vernon are selling their investments in three Information Technology (IT) parks in Chennai, Pune and Gurgaon for a cumulative value of 1,500-2,000 crore, a person directly involved in the transaction told ET.

"They have been in the market for some time now. Shapoorji holds 26% stake in these parks while the remaining is held by PE fund New Vernon, which it picked up in 2006," said two investment bankers, requesting anonymity.

A Shapoorji Pallonji spokesperson did not respond to an email query sent by ET. Repeated phone calls to New Vernon went unanswered.

The real estate arm of Shapoorji Pallonji Group has a chain of IT parks in special economic zones, called SP Infocity, across locations such as Nagpur, Gurgaon, Manesar, Mohali, Kolkata, Chennai and Mysore.

Shapoorji Pallonji Real Estate is currently building a 2.70 million sq ft IT park in Chennai, which is being developed in two phases. The first phase, spread over 950,000 sq ft, has been completed and is being leased to firms such as HSBC, Amazon and Saksoft.

The other two IT parks - SP Infocity in Gurgaon and Pune - are operational and leased to companies such as IBM, Honeywell Automation, Nokia and global supply chain management firm Li & Fung.

Separately, New Vernon, along with Housing Development Finance Corp (HDFC), a private equity fund and another fund house holds 27% stake in five special economic zones (SEZs) and IT parks in different parts of the country.

New Vernon has an investment of $60 million in these projects, while HDFC has $75-million investment.

HDFC is planning to withdraw its investment in these projects to spend in two residential projects in Pune, where it will hold majority stake.

On the other hand, Shapoorji Pallonji holds majority stake of 73% in these five projects. Real estate currently forms a very small business for the group. The company recently floated $500 million private equity fund, mainly focussed on real estate.

"The projects will be put under an SPV when the stake is sold. The return on investment will be in early teens," said the first person.

Shapoorji Pallonji Real Estate Fund has so far managed to mop up $250 million from third party investors, and plans to invest the raised money in development of projects for the SP Group and third party.

Last year, Shapoorji Pallonji appointed Rajesh Agarwal, former head of AIG real estate fund, to spearhead the private equity business for the company.

As per Chennai-based private equity and venture capital tracking firm Venture Intelligence, private equity real estate firms invested $477 million across 10 deals during the quarter ended March 2012 as against 26 deals worth $1,523 million last year in corresponding quarter.