Ace stock-market investor Radhakishan Damani, who is also the promoter of listed company Avenue Supermarts Ltd, has come in as an anchor investor in Embassy Office Parks ahead of the real estate investment trust’s (REIT) initial public offering (IPO).
Damani, through his trusts, acquired 5.33 million Embassy units worth Rs 160 crore out of the total Rs 1,743.16 crore that the REIT raised from anchor investors. These units were allotted at the upper end of the price band of Rs 299-300 apiece.
Other marquee investors in the anchor allotment included funds of US-based investment firm Fidelity International, emerging market funds of Britain’s TT International, and Deutsche Bank Singapore subsidiary DB International (Asia).
In all, Embassy Office Parks is looking to raise Rs 4,750 crore ($682.5 million) from the public offering that opens on Monday and closes two days later. Embassy Office Parks is a joint venture between Bengaluru-based developer Embassy Group and US-headquartered private equity giant Blackstone Group. It will be the first REIT to go public. REITs are investment companies that own, operate or finance income-producing real estate.
Many other global funds and investors such as Citigroup (Mauritius), Morgan Stanley (France), Schroder Investment Management, Lockheed Martin employee retirement fund, Wells Fargo, and a trustee company of Japan’s Sumitomo Trust and Banking Co also participated in the anchor allotment.
Among Indian insurers, only private-sector firm Kotak Mahindra Life Insurance Co Ltd participated in Embassy REIT’s anchor allotment.
Back-of-the-envelope calculations show that Embassy REIT will issue at least 158.33 million units to investors at the upper end of the price band. Institutional investors will be allotted no more than 75% of the units.
Embassy REIT said it will use Rs 3,710 crore for repayment or advance payment—either partially or fully—of debt availed by its special purpose vehicle or investment entity. It will also use Rs 460 crore for acquisition of the Embassy One assets currently held by group entity Embassy One Developers Pvt. Ltd.
VCCircle had reported that US-headquartered financial services giant Capital Group had committed to invest Rs 872 crore (around $125 million) as a strategic investor in a pre-listing capital-raising exercise.
As many as 12 merchant banks are managing and arranging the issue. Morgan Stanley India, Kotak Mahindra Capital, JP Morgan India, DSP Merrill Lynch are the global coordinators and book-running lead managers.
Embassy Office Parks REIT had filed its draft red herring prospectus for the IPO last September. It received the regulatory nod in December.
Embassy Office Parks is Asia’s largest REIT in terms of portfolio size at 33 million sq ft.
The Blackstone-Embassy joint venture was formed in 2012 with an aim to develop office projects. The duo had filed an application with SEBI to form the REIT in 2016. The REIT was set up in March 2017. It operates in Bengaluru, Pune, Mumbai and Noida.
SEBI had first notified the REIT regulations in 2014. However, few developers showed interest in setting up REITs as investors wanted more measures, including tax breaks. SEBI subsequently modified the regulations several times in a bid to attract investors.
