Shapoorji Pallonji and the Allianz Group have collaborated for settting up a real estate fund worth $500 million. This joint fund is named SPREF II which will invest for establishing commercial properties in the country. The transaction is also the first major investment in the Indian real estate market made by the German firm. The transaction was executed by Allianz Real Estate, which is a $63.5 billion asset management and real estate investment firm within the Allianz Group.
This transaction is a part of the Group’s strategy for allocating close to 5% of the global realty portfolio for the Asia-Pacific region according to its official statement. Allianz will possess 50% of the platform and the rest will be held by institutional investors (long-term). The fund will be looking to raise close to $500 million by way of equity. The fund plans to create a long-term commercial portfolio which generates cash flow. There are 6 targeted cities for the fund in the country, namely Hyderabad, Bangalore, Mumbai, Chennai, Pune and Delhi-National Capital Region.
According to the chief executive officer at Allianz Real Estate, Rushabh Desai, approximately 60% of the fund will be targeted for deployment for emerging economies. India is a key market since it has been outperforming other markets on a consistent basis. The venture has been backed up by Shapoorji Pallonji Investment Advisors, spearheaded by Rajesh Agarwal. There is the potential for developing or buying out approximately $1.5 billion of commercial projects across the country.
According to the Chairman of the Shapoorji Pallonji Group, Shapoor Mistry, this partnership is definitely beneficial from a long-term value creation perspective and the Shapoorji Pallonji Group will support this venture with its experience in real estate asset management. Shapoorji Pallonji Real Estate already has an equity platform of $250 million with IFC, a member of the Asian Development Bank and World Bank Group for coming up with affordable housing projects across the country.
Currently, three projects with inventory of approximately 15,000 units, are at several stages of development. In the year 2015, the Canadian Pension Plan along with the Group acquired the Information Technology Park at Chennai spanning 2.7 million sq. ft. for a whopping $220 million.