Tatas Invest Rs 470 Crore In Shriram Properties

Tata Capital, a private equity arm of the diversified $100 billion Tata Group, has invested $80 million (Rs 470 crore) for 15% stake and a board seat in Shriram Properties, the Bangalore-based real estate unit of the Shriram Group. This is perhaps the first real estate investment by the Tatas outside the group.

Shriram Ventures is likely to invest the money into other group companies, especially listed Shriram EPC and new businesses. The promoter stake in the privately held Shriram Properties stands at 42% after the Tata investment. Marquee global investors TPG, Starwood Capital and Walton Street Capital are the present investors in the company.

Shriram Properties is a zero-debt company and has cash reserves in excess of Rs 400 crore. "With Tata on board, it positions Shriram Properties favourably for an IPO in the near future," M Murali, MD, Shriram Properties said.

"From a consumer perspective we found something strong and differentiated in Shriram Properties. It was one of the few real estate companies in which we found depth in the management team and a high level of professionalization," said Padmanabh Sinha, managing partner, Tata Opportunities Fund.

He said Shriram's focus on mid-market housing was an important factor that helped in sealing the deal. "We believe that the residential real estate market, particularly mid-market housing (Rs 50 lakh) should see high growth on the back of increasing urbanisation, changing demographics and an up-turn in the economy," said Sinha.