Xander’s PE Arm Invests $40M In Chennai’s Appaswamy Realty Project

The private equity arm of the global investment firm Xander Inc has invested $40 million in a pre-leased IT Park of the Chennai-based developer Appaswamy Real Estates Ltd (AREL), sources close to the transaction have told VCCircle.

A source privy to the transaction said, “Xander’s private equity arm will hold 100 per cent equity stake in the project. The investment has come in AREL’s project called Futura, located on Old Mahabalipuram Road in Chennai. The project was granted approval by the Software Technology Parks of India (STPI) and it is a ready property with tenants in place.”

PayPal and eBay are the anchor tenants at the facility, spread across 0.56 million sq. ft. and boasting twin towers.

According to market sources, Xander is looking at an internal rate of return of 11.5-12 per cent from this investment.

Element Capital Advisors was the sole advisor to the fund and Amarchand & Mangaldas was the legal advisor to the transaction.

T.S.S. Krishnan, chief operating officer of AREL, said, “We have not yet completed the transaction but we will be closing it in the next 10-15 days.”

According to our sources, the deal was struck during the last quarter and the realtor is not looking to sell any other asset.

AREL has already completed the development of 6.3 million sq. ft. of residential, commercial and IT projects in Tamil Nadu. The company is promoted by the Appaswamy family, which has interests in property development, hospitality and renewable energy generation. It has nine ongoing realty projects across the state and has two IT park projects in its kitty – Futura and E-gate.

Xander primarily invests in companies operating in infrastructure, hospitality, entertainment, retail and real estate sectors. Its last transaction in real estate came from its credit division called Xander Finance, which put in Rs 70 crore in Mumbai-based Ajmera Realty’s project Times Square. The deal took place in February this year.

The latest deal adds to a clutch of transactions which had been sealed in Chennai. Recently, Paracor Capital Advisorsinvested $10 million each in Hallmark Infrastructure’s two residential developments and last year, ASK Property Investments put in around $10 million in a project by Real Value, among other transactions.