Alok Ind Resumes Talks To Sell 20% In Realty Arm To PEs

Alok Industries, the Rs 2,200-crore Mumbai-based textile firm, has resumed talks with private equity players to dilute about 20 percent equity it owns in its unlisted unit, Alok Infrastructure. A realty company, Alok Infrastructure has been looking at options to raise around Rs 600 crore for developing its large land bank, said sources.

Alok Industries plans to sell part of its stake in its realty unit to 3-4 private equity firms by August end. The company’s chief financial officer Sunil Khandelwal is currently in the UK for negotiations on this issue.
“We are working out different options and strategies for our realty venture and something will happen before August. I am not in a position to divulge anything more now,” he told ET from London. Ernst & Young is advising Alok Industries on the equity dilution in Alok Infrastructure.

Alok Industries had initiated talks with private equity firms in October last year, but had to discontinue after crashes in the stock markets led to a steep correction in valuations. According to analysts, Alok could be looking at increasing the valuation of the realty company through a private equity deal and subsequently list it.

Alok Infrastructure plans to invest large amounts in real estate development and is also developing over one hundred eighty acres in its textile SEZ in Silvassa. It has already acquired two hundred twenty acres at Silvassa. The company has also acquired one hundred thirty acres at Panvel at the rate of twenty five lakh rupees per acre in a 50-50 joint venture.

According to India Real Estate sector report Global Research, the Indian real estate market is expected to grow at a CAGR of 20 percent, driven by an 18-19 percent growth in residential real estate, 55-60 percent in retail real estate, and 20-22 percent in commercial real estate, over the next five years.

One Comment

  1. Posted June 9, 2008 at 3:20 am | Permalink

    With the Indian real estate market slated to grow 35-40 per cent in value terms over the next two years, private equity (PE) players are lining up significant investments in the segment. Led by Blackstone and the PE arm of Deutsche Bank, a host of players -including Red Fort Capital Advisors, Starwood Capital and Walton Street – are expected to invest close to US$ 12 billion combined in homes, offices, townships, hotels and other projects. In 2006, markets regulator SEBI opened up the real estate market to PE investments. The first year was a learning period. The following year saw a real correction in the market, with large incremental growth rather than dramatic growth, where stock market money went into special purpose vehicle-level investments. Experts say that in calendar 2007 alone, PE players would have invested US$ five billion in the Indian real estate sector. But there is need for investments of up to US$ 18-20 billion, which are expected in FY09 and FY10. Investments of US$ 1,400 billion are being made by Real Estate Investment Trusts globally. Hence, more global investors will start looking at Indian realty. This investment zeal comes in the backdrop of a much broader enthusiasm that PE players have shown across sectors in India in recent times. This trend is likely to continue strongly through 2010, driven by robust economic growth and attractive market valuations.For more view-

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