Shapoorji Pallonji not to enter realty PE space

Real estate giant Mumbai-based Shapoorji Pallonji has called off its plans to foray into the real estate private equity space, as the company has not been able to raise a corpus of USD 500 million; according to sources. CNBC-TV18’s Priyanka Ghosh reports.

This really marks Shapoorji Pallonji's second failed attempt, as far as foraying into private equity real estate is concerned. Their first attempt was made in 2007 and then they floated a real estate private equity fund in 2011. The corpus was to be USD 500 million. It was of course an overseas fund. The group had planned to invest 60 percent of the corpus into other companies’ projects, while 40 percent would be plowed back into their own projects, of course the projects of Shapoorji Pallonji Real Estate. To affect this plan, they had even hired a senior official from AIG Global. However, sources told CNBC-TV18, the group has now dropped plans. The primary reason seems to be a conflict of interest, as they had this mandate that they wanted to plow back 40 percent of the corpus into their own project. That was really a bone of contention as far as foreign investors are concerned. The company says,"Shapoorji Pallonji is actively pursuing its real estate Investment Advisory aspirations through a dedicated entity and has made substantial progress with marquee institutional investors from key developed markets. The investors have shown tremendous faith and confidence in the conflict management structure established by the investment advisory vehicle." The bigger picture is that Shapoorji Pallonji is probably the country's largest developer. They have an excellent brand name and an impeccable track record.
Now, if this company is not able to lure investors, then the global picture is quite grim so far as raising overseas funds are concerned. CNBC-TV18 had written to the officials at Shapoorji Pallonji on Tuesday evening and they have not reverted.