GIC invests US$1.4b in joint venture with Indian developer DLF
Singapore
SINGAPORE sovereign wealth fund GIC is investing US$1.4 billion in a landmark joint venture with India's leading real estate developer DLF Ltd, in one of the largest private equity transactions in India in the real estate space.
The strategic partnership between GIC and DLF is to develop a rental assets portfolio under the consolidated portfolio of DLF Cyber City Developers Ltd (DCCDL), a subsidiary of DLF, said a statement issued jointly by GIC and DLF on Sunday.
Following the transaction, an affiliate of GIC will hold 33.34 per cent of equity shares in DCCDL while DLF will hold the remaining stake.
DCCDL owns and operates a rent-yielding portfolio of office and retail assets of nearly 27 million square feet across India.
The transaction will create one of the leading platforms for rental properties in India, with rent-yielding assets in some of the nation's main cities totalling 26.9 million sq ft.
Another 2.5 million sq ft is under development, with a further development potential of about 19 million sq ft within the portfolio.
"The partnership enables sustainable, long-term growth of DCCDL's rental business and creates an optimum structure for its rental business to improve efficiency, with long-term capital for growth of the portfolio," the statement said.
Rajiv Singh, vice-chairman of DLF, said: "We are excited to enter into yet another landmark transaction with GIC. We expect this partnership to unlock significant embedded value in this portfolio and achieve scale and growth to unprecedented levels."
The transaction envisages an enterprise value of 35,617 crore rupees (about S$7.6 billion) for DCCDL.
Lee Kok Sun, chief investment officer of GIC Real Estate, said: "We are pleased to enhance our existing partnership with DLF, one of India's leading real estate developers, through this landmark transaction.
"This portfolio comprises high- quality, income-generating assets which are located across India's top-tier cities. In addition, there is significant development potential within the portfolio.
"As a long-term investor, we believe in the growth potential of India and in strengthening relationships with like-minded partners."
The gross proceeds to the sellers from the transaction would be 11,900 crore rupees, where a substantial portion of the transaction proceeds will be invested in DCCDL.
This comprises a secondary sale of equity shares - post-conversion of compulsory convertible preference shares (CCPS) to GIC for about 8,900 crore rupees, and two buybacks of CCPS for 3,000 crore rupees by DCCDL. Out of this, one shall be done before the closing and the second will be done 12 months thereafter, it said.
The statement also noted that the transaction has customary representations and indemnities; subject to regulatory and shareholder approvals.
