INSUBCONTINENT EXCLUSIVE:
BENGALURU: RMZ, one of India’s largest business park developers, has struck a nearly $1-billion deal to buy back shares held by Qatar
Investment Authority (QIA) and Baring Private Equity Partners, thwarting a hostile bid by crosstown Bengaluru rival Embassy Group
The promoters of RMZ — billionaire brothers Raj and Manoj Menda — purchased 45 per cent shares held by the two investors in possibly the
largest buyback by a private company in recent times.
The holding company, RMZ Infotech (RIPL), operates about 24 million sqft of fully
leased office buildings with a projected net operating income of Rs 2,000 crore annually
The Menda brothers, both of whom are RMZ corporate chairman, confirmed the share buyback deal, which is being paid out through bank
financing and internal accruals, and said the family was consolidating all the established, fully tenanted business parks under the holding
The Mendas said the promoters would retain full ownership of RIPL through family trusts from now on.
The transaction valued the company at
over $2 billion, though the asset valuation (at around 7 per cent capitalisation rate) is pegged higher at $4 billion, sources briefed on
The Mendas refused to disclose valuation details, citing confidentiality agreements
Baring is said to have been advised by Standard Chartered Bank and JLL on the share sale deal, while QIA had StanChart only
Baring India did not respond to repeated calls and text messages
An emailed query to QIA during the weekend remained unanswered.
The share buyback was part financed by existing lenders Deutsche Bank and
RMZ is learnt to have purchased the shares by offering both QIA and Baring returns in the 250-300 per cent range on their investments
The deal also marks one of the first, large profitable exits by global investors who have poured money into the country’s stable,
rentyielding commercial real estate assets.
Last December, Embassy Group chairman Jitu Virwani entered the fray to buy shares after Baring
started a process to sell its 21 per cent stake in RMZ
Virwani, locked in a bitter business rivalry with the Mendas, also opened hostile moves to mop up another 24 per cent from QIA to build a
significant minority position
RMZ competes with Embassy Office Parks, a joint venture between Virwani and Blackstone Group, and K Raheja Corp in building out large
tenanted office spaces in Asia’s third-largest economy.
The battle between Mendas and Virwani has been more intense with occasional
Still, Virwani’s attempts to emerge as a shareholder in the arch rival’s company had stunned the sector.
The Embassy founder was seeking
to carve up the RMZ business proportionate to his shareholding, if he had succeeded
After fending off the raider, the Mendas would henceforth look for capital-raising only for projects that are under development, that too
It is learnt that both QIA and Baring have the option of investing in such projects in the near term.
RMZ has big business parks under
development in Hyderabad through an equal joint venture with MyHome Industries, and in Chennai
Bengaluru, the home turf of Embassy and RMZ, remains the largest market for grade-A office space absorption in the country
The city had 36 per cent share of the market estimated at 43 million sqft in 2017, said a Colliers International report
NCR and Mumbai followed with 18 per cent and 13 per cent respectively.
