DE Shaw to invest $250 million in HDIL Group Company

Real estate firm Housing Development & Infrastructure (HDIL) on Wednesday said the private equity firm DE Shaw is investing $250 million in Mack Star Marketing, an HDIL group company.

Mack Star Marketing holds development rights for a 54,000-metre commercial complex being constructed in Andheri. Last week, HDIL had transferred its development rights to this complex to Mack Star for Rs 900 crore.

DE Shaw’s investment is in the form of equity and debt. HDIL managing director Sarang Wadhawan said DE Shaw will hold a minority stake, but declined to give details.

The investment comes at a turbulent time for India’s capital and real estate markets. The steep meltdown in January and the withdrawal of Emaar MGF’s IPO in February rattled real estate firms who rely on equity to fund their expansion projects.

PE money, which was always sought after, has become attractive now, but funds are being very selective and managements are also being forced to offer realistic valuations.

PE investment in the real estate sector is down 25-30% in the past year on a volume basis, a leading consultant said on Wednesday. Investment bankers said the real estate and private equity funds are very selective and all funds are now scouting for most viable projects.

Mr Wadhawan said, “Compared to other cities, the real estate story in Mumbai is different as the demand supply mismatch in the financial capital is very huge. Real estate funds and PE are happy to associate with real estate projects in Mumbai”. HDIL shares rose 2.3% to Rs 855.70 on BSE
on Wednesday.

HDIL had entered into a sale of development agreement with respect to its project named Kaledonia at Sahar Road, Andheri (East) with Mack Star Marketing for a consideration of Rs 900 crore.

HDIL, one of the leading real estate developers with operations in the Mumbai Metropolitan Region, is a part of the Wadhawan Group which has been involved in real estate development for almost three decades.

The company recently bagged the slum rehabilitation project of MIAL that aims at rehabilitating slums in and around Mumbai airport spread over an area of 276 acres.

The company has also been short listed by the state government for bidding for the prestigious Dharavi Slum Rehabilitation Project. The company is also in the process of executing commercial, residential, and retail projects across the country.