DB Realty is in talks with private equity firms to raise Rs.1,200 Cr ($256 million) by diluting 20% stake in its Bandra Government Colony project. This values the project at Rs.6,000 Cr.

In 2009, D B Realty bagged the right to redevelop a large chunk of the 100-acre PWD government colony in Bandra (East) along the Western Express highway.

Last week, it received a Letter of Intent from the state government to develop Sector J of Government colony at Bandra (East), Mumbai measuring approx. 2,31,174 square meters (approx. 57 acres). It plans to build a world-class enclave comprising residential and commercial units.

The remaining portion colony is expected to be handed over to two other developers, Kakade Infrastructure and Ackruti City. The LoI for these two is yet to follow.

DB Realty will reconstruct the government residential buildings and hand over the constructed building to them and balance 11 acres would belong to DB Realty as their saleable component.

Transaction Reference: DNA

The project is expected to be completed in five years. The state government selected DB Realty, Pune-based Kakade Group and Ackruti City in 2009 from bids to execute the lucrative project estimated to cost Rs 2,400 crore. DB Realty, Kakade Group and Ackruti City will pump Rs.620 crore, Rs.160 crore and Rs.420 crore respectively into the project and also pay an equal amount upfront to the government.

DB Realty will use its transfer of development rights (TDR) portion of 3.2 million sqft from its Mahul project near Chembur for this purpose.

The Bandra-Kurla colony currently has almost 5,000 flats in ground-plus-three storey buildings. It was built between 1958 and 1968. According to the plan, the successful bidders will have to redevelop the residential buildings and construct shopping complexes, gardens, schools and recreational grounds.

The project also envisages construction of a super-speciality government hospital as well as an 8-lakh sq ft administrative building as large as Mantralaya. There will also be a community hall and a clubhouse.

DBRL is part of the Dynamix Balwas Infrastructure Pvt. Ltd which also has interests in hospitality, power and telecom.

DB Realty is engaged in developing residential and commercial properties mostly in and around Mumbai. It has 10 ongoing projects, aggregating approximately 18.61 Mn sqft of saleable area, 9 forthcoming projects, aggregating approximately 20.17 Mn sqft of saleable area and 6 upcoming projects, aggregating approximately 22.11 Mn sqft of saleable area.

The company plans to develop 44 million square feet this year, which includes properties in Abhyudaya Nagar at Kala Chowkie of 3 million sqft through a 60:40 joint venture with Shreepati Group.

It has also secured a slum cum open private land in Premnagar, Goregaon, which will add 6 million square feet. The company is also acquiring a 106 acre land parcel in Thane.

Beginning of this year, it raised Rs.1,500 Cr through initial public offering (IPO). From the money it raised from the IPO, the developer plans to spend at least Rs950 crore in project acquisitions and construction.

It posted a consolidated net profit of Rs.61.84 crore for April-June quarter 2010 on net sales of Rs.264 crore.

The other real estate player Rohan Lifescapes Ltd is also planning to raise Rs.400-500 Cr through PE for redevelopment projects in Mumbai.

This year, many real estate players have raised PE. HDFC Venture Funds invested Rs.500 Cr in one of the projects of Lodha Developers for 10% stake, Indiaret Fund's acquired minority stake in SOBO Central Mall, Panchshil Realty raised Rs.520 Cr from the Xander Group for developing hotels across the country, Ozone Group raised Rs 200 Cr from Urban Infrastructure Real Estate Fund for its 'Urbana' township project in Devanhalli, Bangalore. HCC sold a 74% stake in a commercial building in Mumbai’s eastern suburbs to the IL&FS Milestone Fund for Rs.575 cr 2 months ago, a valuation of Rs 775 Cr.

Previous Article

Solar Energy Firm Clover Solar Is Looking For PE Funding

Next Article

LIC To Invest R125 Cr in Dena Bank For 5% Stake