BANGALORE: HDFC Asset Management Company, the portfolio manager of HDFC Mutual Fund, has decided to sell its entire stake in Nitesh Housing Developers, a subsidiary of Bangalore-based Nitesh Estates.
The fund house had bought 10.1% stake in the subsidiary of the real estate developer for Rs 68 crore in 2009. Nitesh Housing Developers owns four projects in Bangalore - Hyde Park, Columbus Square, Napa Valley and Fisher Island - spread across 10 million sq ft. The majority stake in the company is held by Nitesh Estates.
"The stake is being bought by the promoter through internal cash flow and HDFC AMC has made over 24% IRR on its investment," said a person with direct knowledge of the transaction. Ashwini Kumar, chief operating officer at Nitesh Esates, confirmed the development.
Nitesh Housing Developers is in talks with a clutch of private equity investors to raise around Rs 350 crore. For this, it may either dilute stake in Nitesh Housing Developers or aggregate four to five land parcels together and divest stake in the special purpose vehicle.
Private equity-real estate investment in the first six months of 2013 was valued at $887 million across 20 deals with disclosed values, according to research firm Venture Intelligence. The recorded transaction was down 16% at $659 million across 22 investments during the same period in 2012.
Nitesh Estates has over 4,046 units across Bangalore and Goa. It has so far invested Rs 476 crore and will require Rs 1,904 crore to fund its projects. The company has so far sold 1218 units. "The company wants to double the portfolio from 12 million sq ft now and increase revenue potential to Rs 8,000 crore over the next few years," Kumar said.