Nitesh Estates Plans To Raise 1200 Crore

Published: August 10, 2009 at 6:56 PM | Author: Administrator
News Source: August 10, 2009 - Indian Realty News

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Nitesh Estates, a Bangalore-based realty major, is on private equity trail after Citigroup snapped a $350-million funding last year, citing the deteriorating economic environment. The firm has now opened talks with Farallon Capital, JP Morgan and TPG Capital, among others, for raising capital through equity sale at entity and project levels, said multiple sources familiar with the development. It is planning to raise Rs 1,200 crore through a combination of PE deals and a possible initial public offering (IPO) during the fourth quarter of this fiscal. The company is in the process of raising around Rs 600 crore through PE placement, while the IPO size could be Rs 500-600 crore. Morgan Stanley is advising Nitesh Estates on the private equity fund raising, which kicked off nearly two months back. Promoter Nitesh Shetty has a 85% stake in the company, while Och-Ziff holds the remaining. When contacted, Nitesh Estates declined to comment.

While investors, like JP Morgan and Farallon, have been scouting for real estate portfolios, TPG Capital’s interest in the sector is relatively new. A banking source confirmed that TPG Capital has been holding preliminary discussions with a few realty players to book assets that are coming in at discounted valuations. Till now, TPG’s realty exposure was mainly through a $10-billion hedge fund TPG-Axon Capital Management. Sources said Nitesh has approached PE players for funding its realty plans in Bangalore, Chennai and Kochi — the projects into which Citigroup funding was expected to flow in. Citigroup Property Investors rolled back operations in emerging markets, following last year’s financial turmoil. The global financial giant’s real estate arm limited its exposure to $55 million investment in Nitesh Estates’ upcoming Ritz Carlton hotel in Bangalore, and discontinued its financing for other projects.

In the past, Nitesh Estates has claimed that it has 8-9 million sq ft development in the pipeline, mainly across the four southern cities and Goa. “The funds would be raised through PE transaction and IPO. We hope to first finalise the PE placement, which will be an equity level as well as special purpose vehicle level. The investment bank has brought a few potential investors on the table,” said a source with direct knowledge of the development. While the company has tied up financing for India’s first Ritz Carlton, some of its other large projects, including a mixed use development near Bolgatty in Kochi, a villa project at Devanahalli in Bangalore and a city center development in Chennai require funding.