BANGALORE: South India's biggest landlord, Dayanand Pai, is looking to unlock close to Rs 1,000 crore by taking his newly created Century Real Estate Investments (CREI) for an initial public offer (IPO), people directly familiar with the matter said.
The new company - incorporated in the last 60-days - offers investors a Bangalore-focused real estate play. It has currently brought together eight land parcels under joint development with city's A-list developers. This, at a time when the country's IT capital has proven to be the best performing real estate market in the country with residential sales continuing to clock double-digit growth and investor appetite for office spaces on the rise.
The eight projects, amounting to about 28 million sq ft of constructed real estate space, will give CREI cash flow receivables upwards of Rs 7,000 crore (around $1.2 billion) for its share in the developments. CREI's list of joint development partners include Embassy Group, Shriram Properties, Mantri Developers, and Puravankara Projects, among others, documents accessed by TOI showed. The company, spearheaded by family scion Ravindra Pai, has a further pipeline of joint development projects, for which agreements are still to be executed, that would generate an additional Rs 5,000 crore.
Former IRDA chairman N Rangachary is the chairman of the new company, while Ranjan Pai of Manipal Education and Medical Group is among the board of directors. A CEO from a well-known fund house is in the process of being hired to run the operations. Ravindra Pai, who would be MD of the company, declined to comment.
Sources cited earlier said that Pai is expected to finalize investment bankers in the next 30 days, following which the listing process would be set in motion. However, one would have to see how market regulator Sebi reacts given its history of being prickly with the Indian real estate sector.
Aiming to shore up Rs 1,000 crore from a potential listing, CREI would use part of the proceeds to pare debt in the form of non-convertible debentures and channel the remaining money into buying more prime land parcels, said sources.
The Century Group holds over 3,000 acres in south India, largely concentrated around Bangalore, and also has a development arm that came into existence around eight years ago.
However, the creation of an entity such as CREI shows that the second generation of the Pai family is sticking to what the family has done best for close to 40 years - land aggregation and joint developments. Dayanad Pai has been associated with a number of iconic land parcels in Bangalore's central business district and has exited most of these projects with an IRR of 40%.