Morgan Stanley backs Oberoi Constructions

January 19, 2007	(1 votes, average: 5 out of 5)  Loading ...
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Satisfied with Mumbai’s Oberoi Construction vision, enterprise and execution of projects, Morgan Stanley has opted to invest Rs. 675 crore in return for a 10% stake in the 30 year old unlisted company.

Oberoi Construction sells almost 1000 apartments a year, and is engaged in the construction of commercial properties as well in the city. On the anvil are plans to expand into construction of hotels, shopping malls, hospitals and educational centres. Sources at Oberoi disclosed that this investment would help the company in timely execution of its ongoing projects, enabling also a liquidity of $1 billion in the next 3-4 years. The company holds 15 million sq. ft of property in Mumbai. In the pipeline are ventures in Pune, Hyderabad and Bangalore for which land has to be acquired.

Kotak Mahindra Investment Bank which facilitated this largest ever PE fund deal, valued the company at $1 billion. Morgan Stanley was in the race along with 14 other funds, which included Blackstone, Carlyle and GE amongst others. Anand Madduri, Executive Director, Morgan Stanley, has been appointed on the board of Oberoi Construction

Morgan Stanley is estimating an annual return of over 30% from this investment. It had recently invested Rs.300 crore in Mantri Developers. The last few months have seen a burst of activity on the part of investment funds to invest in real estate, which is slated for a sustained rate of 35 to 40%.

The real estate saw private equity investment coming in from Siachen Capital with $100 million in Bangalore’s Nilesh Estates, HDFC Real Estate with $35 million in Ansals’ IT City, and $31 million in Pune’s Vascon Engineers. Hiranandani Constructions, the Rahejas and Unitech raised $2.3 billion from overseas recently. Farallon Investments, USA, invested Rs.1429 crore in 4 real estate companies in partnership with L.N.Mittal

There are over 20 companies waiting to park their funds in real estate in India – with ICICI Realty with $1billion and Kotak Mahindra with $500 million amongst others.

News Published Under:   Real Estate India, Real Estate Developers |