Blackstone in race for $250m stake in K Raheja

MUMBAI: Blackstone Group has filed a formal bid to buy a minority stake in the commercial unit of K Raheja Corp, one of India’s top three owners of tenanted offices, vying with Singapore’s Temasek Holding and rival private equity investor Warburg Pincus, people directly familiar with the matter said. The three bidders are in the final lap, though Temasek is said to be the front-runner as of now, sources added.

Blackstone’s bid is interesting as it has already emerged as the largest landlord of Indian commercial real estate, and is also in advanced talks to buy 40% stake in DLF’s commercial unit. The billionaire Chandru Raheja-led company plans to raise $250 million by divesting around 15% stake in the rent-yielding office space assets that operate under the brand Mindspace. It owns over 20 million sq ft of leased space primarily in Mumbai, Pune and Hyderabad.

“Temasek is in the pole position but Blackstone and Warburg Pincus are strong contenders. The share sale will be worth $225-250 million, depending on the exact stake involved,” said one of the sources speaking privately due to confidentiality norms. A spokesperson for K Raheja Corp said he would not comment on speculation.

Blackstone actively chased acquisitions in the past five years and has a pipeline of 50 million sq ft, more than half of it already leased. It is also one of the two contenders left in the fray to acquire 40% stake in the commercial unit of DLF.

Last year, Mumbai-headquartered K Raheja Corp, with siblings Neel and Ravi in charge of operational management, mandated JM Financial and Morgan Stanley for a share sale process valuing the commercial unit closer to $2 billion.

The stake sale move is a bit surprising since K Raheja Corp had done significant work towards a REIT listing of the commercial unit. But long-term risk investors such as global pension funds and sovereign wealth managers have stepped up interest in the country’s stable rent-earning real estate assets, prompting leading developers to explore a stake sale.

India’s grade-A office space market is pegged at 400 million sq ft, with fresh annual absorptions estimated at around 32 million sq ft, making it one of the most buoyant markets in the world. K Raheja Corp’s strong portfolio of commercial assets has insulated Mumbai’s heavyweight developer from the sluggish residential sales in recent years.



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