BENGALURU: Shanghai-based Fosun Group is in advanced discussions to invest Rs 800 crore ($125 million) in southern developer Nitesh Estates in what would be the Chinese conglomerate’s first M&A deal in the Indian real estate sector.
Billionaire Guo Guangchang-led Fosun, with more than $75 billion in assets, is likely to pick up around 50% stake as it looks to build a property platform to expand in the country, people directly familiar with the matter said. This would be Fosun’s second buy in India after snapping up controlling shares in Hyderabad-based Gland Pharma in a billion-dollar deal last year.
Nitesh plans to issues shares to Fosun Property Holdings and IDERA Japan, which is controlled by the former, through preferential allotment. The Bengaluru-based company’s founder Nitesh Shetty will retain 25% and continue to run operational management. The potential transaction would trigger a mandatory open offer by the company to public shareholders, though there are no delisting moves afoot now.
JM Financial, Yes Securities, Cyril Amarchand Mangaldas and EY are said to be advising on the deal-making. Shares in India’s first Ritz Carlton hotel will not be part of the transaction as the first generation entrepreneur Shetty plans to keep it as a part of his personal investments. Similarly, Nitesh Hub mall in Pune, which is majority-owned by Goldman Sachs, is also not part of the ongoing deal with Fosun. When contacted, a senior Fosun India official and Nitesh Shetty declined to comment.
Nitesh has a portfolio of 20 million sqft of completed and under development residential and commercial projects. The company plans to use the proceeds to pare debts and fast track under development projects delayed by adverse market conditions. Going forward, Fosun would co-invest with Nitesh Estates to acquire property assets to expand the Indian real estate footprint. Three years ago, Fosun made a similar entry into Japanese real estate industry by acquiring mid-size asset manager IDERA Capital Management, which owned office buildings in greater Tokyo.
Residents of Nitesh Forest Hills, an apartment complex owned by luxury estate brand. Nitesh estates have gone to the consumer court over the issue of unfulfilled promises. The residents association is now hoping to make it a collective protest in order to truly make their 'dream' come true.
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