US investor Capital boards India’s 1st REIT

MUMBAI: Storied American investor Capital Group has shown up as a strategic investor with Rs 876-crore (or $125-million) investment in Embassy Office Parks, the country’s first real estate investment trust (REIT) poised for listing on the bourses very soon.


Capital, one of the largest investors managing assets worth nearly $2 trillion globally, will have a six-month lock-in once the REIT starts trading, possibly as early as next week. The entry of Capital Group signals the promise of the REIT, riding on India’s tenanted office spaces.

Embassy Office Parks, sponsored by private equity giant Blackstone and Bengaluru developer Embassy Group, is set to debut with a Rs 5,000-crore (or $700-million) listing. The REIT is expected to target a market capitalisation of around Rs 35,000 crore, or $5 billion.

The listing of REITs has a category of strategic investors, where the lockin is six months, while anchor investors, which are typical in any IPO, will be locked in only for 30 days. “From this perspective, Capital’s commitment to the first ever REIT listing in India is significant,” analysts tracking the listing said.

Capital through its entities — American Funds Insurance Series, New World Fund, Inc and Small Cap New World Fund — subscribed to 29,208,800 units in the upcoming REIT issue. The 80-year-old Capital Group, which offers more than 40 mutual funds in the US, has had limited exposure to the Indian market. Its private equity business has picked up stakes in select Indian companies such as

Mankind Pharma

, Intas and L&T Finance, among others.

Embassy Office Parks has also named billionaire investor and Manipal Education & Medical Group chairman Ranjan Pai, Punita Sinha, Anuj

Puri

and Vivek Mehra as independent directors.

Blackstone president and chief operating officer Jonathan Gray told TOI last month that the REIT will be a big moment in the country’s real estate sector as it opened up liquid investment options in a largely illiquid sector.

The REIT, India’s first and Asia’s largest in terms of square footage, generates rental income of about Rs 2,200 crore annually. There’s a record 12 banks advising the REIT on the imminent listing.