Alok Industries, a Mumbai-based textile giant valued at Rs 2,200 crore, has revived discussions with various private equity players to dilute approximately 20 percent of its equity in Alok Infrastructure, its unlisted subsidiary. This realty firm is seeking avenues to raise around Rs 600 crore aimed at advancing the development of its substantial land holdings, according to insider sources.
The textile firm intends to divest a portion of its stake in its real estate unit to three to four private equity firms by the conclusion of August. Sunil Khandelwal, the company’s chief financial officer, is presently negotiating this matter in the UK.
"We are exploring a range of strategies and options for our real estate endeavor, and we expect to finalize something before August. At this moment, I'm unable to disclose further details," he communicated to ET while in London. Ernst & Young has been enlisted as the advisor to Alok Industries for the equity dilution concerning Alok Infrastructure.
Previously, Alok Industries had engaged in talks with private equity firms back in October of the preceding year; however, these discussions were stalled due to a dramatic downturn in the stock markets that severely impacted valuations. Analysts suggest that Alok is likely aiming to enhance the valuation of its real estate subsidiary through this equity arrangement and subsequently investigate the possibility of listing it publicly.
Alok Infrastructure is gearing up to invest significant funds into real estate development projects, including a development spanning over 180 acres in its textile special economic zone located in Silvassa. Furthermore, it has recently purchased 220 acres in Silvassa and an additional 130 acres in Panvel, acquiring these at a rate of 25 lakh rupees per acre in a joint venture arrangement sharing 50-50.
As per the India Real Estate sector report from Global Research, the Indian real estate market is projected to expand at a compound annual growth rate (CAGR) of 20 percent, driven by a growth trajectory of 18-19 percent in the residential sector, 55-60 percent in retail, and 20-22 percent in commercial real estate sectors within the coming five years.