Standard Post with Image

Indiabulls Raises Funds from IL&FS for Bharat Mills Project

  • More than a year after Indiabulls Real Estate Ltd (Ibrel) bought the defunct Bharat Mills land for Rs.1,580 crore in one of the largest land transactions till date in India, the developer has raised private equity (PE) capital, saying it requires the funds for project development.Indiabulls Infra Estate Ltd, a unit of Ibrel, has raised Rs.200 crore from IL&FS Investment Managers Ltd (IIML), sellling a 9.36% stake in the Bharat Mills project in central Mumbai.The realty firm had bought the 8.3-acre Bharat Mills in August 2010 from National Textile Corp. Ltd (NTC) through an electronic auction, narrowly beating Lodha Developers Ltd by Rs.2 crore.In a similar auction in the same month, Indiabulls had also won the adjacent Poddar Mill on 2.3 acres for Rs.498 crore.

  • In 2010, Indiabulls had launched Bleu, a 75-storey tower on the combined land, where prices began at Rs.5 crore for a 2,000 sq. ft apartment. The company didn’t specify if the capital has been raised for this project.On the IIML transaction, Vipul Bansal, chief executive of Ibrel, said IL&FS is a credible partner and together they will change the skyline of Mumbai with the development.The developer has said that the Rs.200 crore transaction values the Bharat Mill land at Rs.2,136 crore, giving it a premium of over 35% above the buying cost of Rs.1.580 crore.Further details on the transaction were not disclosed.

  • IIML did not respond to either an email query and text messages.In 2011, private equity funds invested about $1.31 billion in the real estate sector compared with $1.1 billion in 2010, according to VCC Edge, a research platform that tracks investments.Real estate analysts said the deal is interesting in that Ibrel, which is known to buy expensive city-centric land through auctions, rarely raises PE capital for its projects.Indiabulls has spent Rs.4,000 crore in buying land alone in the past few years. However, the firm is waiting for mandatory project approvals on the mill land.On the project format, Indiabulls said between Bharat and Poddar mills, it is planning a gated development comprising residential development along with IT office space.

  • “Gated complex developments done over large plots are strongly preferred by large corporates, over stand-alone buildings,” it said in a statement.Indiabulls is developing almost 3 million sq. ft on its Jupiter and Elphinstone mills land in Lower Parel, central Mumbai, which it had bought in 2005 and 2006, and where it has built office buildings called One Indiabulls Centre and Indiabulls Finance Centre.Two analysts, who spoke without wanting to be identified, said the Indiabulls-IL&FS PE deal is expensive but will diversify Indiabulls’ risk.

  • “If Indiabulls develops the residential component under the parking FSI (floor space index) scheme, then it makes sense because the weighted average cost of acquisition comes down significantly. It doesn’t make sense if it’s for IT space,” said one of the analysts.Under the parking FSI scheme, a developer gets substantially more area to construct and sell in lieu of building public parking space.However, a recent Maharashtra government amendment of the development control regulation restricted parking FSI usage.

Source