Private equity giant Blackstone will finance south-based Embassy Property Development’s purchase of 22% stake in Manyata Tech Park, the country’s largest operational tech SEZ located in Bangalore, from HDFC Property Ventures for Rs.540 crore.
A source close to the development said the PE behemoth is likely to back Embassy’s stake purchase through a combination of convertible equity and debt totaling $100 million, or roughly Rs.450 crore, sources added. The transaction, if clinched, could mark Blackstone’s biggest real estate investment in India.
The stake buyback would raise Embassy’s shareholding in the IT business park to 57%. Jitu Virwani, Chairman of Embassy Property Development, confirmed the Rs.540-crore share buyback from HDFC Property Ventures, but said he had no immediate plans to raise funds from outside.
Embassy Property Development, which has delayed its Rs.2,400-crore IPO, has been holding talks with Blackstone and Warburg Pincus to raise funds. Blackstone has emerged as front runner to finance Embassy’s buyback in the tech park. Multiple banking sources familiar with the development said the impending transaction “will be a structured finance with an equity component built into it.” Blackstone has already made Rs.135 crore commitment to Embassy’s residential project in Bangalore.
Manyata Embassy Business Park is an integrated mixed-use development business park which has a developable area of 18.29 million sq ft. As of April 2010, 7.85 million sft of developable area within the business park was operational. Jitendra Virwani owns 100% equity stake in the Embassy Property Development by way of 0.4% direct ownership, 91.9% through JV Holding Private Limited and 7.7% through JV Family Trust.
