Goldman Sachs, Deutsche Bank, and an additional financial investor are expected to jointly invest around $800 million in three distinct special purpose vehicles (SPVs) established by the renowned real estate group Emaar MGF. Each SPV will be backed by one financial investor, holding a minority stake in the venture.
As reported by sources familiar with the situation, the Delhi-based real estate developer is currently deep in negotiations with private equity firms and is poised to finalize three different deals within the coming month. A spokesperson for Emaar MGF refrained from providing any comments on this development. The completion of these agreements will mark the first substantial influx of funds into the company since it made the decision to withdraw its initial public offering (IPO) last February.
Emaar MGF, partially owned by Dubai's eminent developer Emaar and locally by MGF, had to retract its ambitious Rs 7,000-crore share sale, which was set to be the largest of its kind in Indian history, largely due to unfavorable market conditions. Since that withdrawal, market dynamics have shifted dramatically, leading to significant losses in market capitalization for real estate firms. Notable industry players like DLF and Unitech saw their market caps shrink by around 45% and 50% respectively, while smaller entities such as Parsvnath and Omaxe faced losses nearing two-thirds of their market valuations since their January highs.
The prevailing negative market sentiment has not only impacted Emaar MGF but also led other giants like DLF, Unitech, and Indiabulls to delay the Singapore listing of their real estate investment trust (REIT). While the flow of capital into the real estate sector has not ceased entirely, developers—including those that are unlisted—are increasingly cautious about equity dilution at the parent level due to concerns over potential undervaluation. Consequently, many firms are opting to pursue private equity funding at either the project or SPV level.
In alignment with this trend, Emaar MGF has also opted for SPV-level fundraising, as the current market Climate may not yield the anticipated valuation outcomes. It is expected that the three SPVs receiving private equity investments will focus on various development projects in sectors including housing, retail, and office spaces. While specific projects have yet to be confirmed, they will likely integrate with ongoing initiatives by the company.
Among its significant projects, Emaar MGF has undertaken an expansive 3,000-acre integrated township in Mohali, a 531-acre township in Hyderabad, and a 14-acre residential development in Chennai. Additionally, they are in the midst of executing the renowned Commonwealth Games village project, which comprises a 27.7-acre residential complex with an impressive estimated saleable area of 1.8 million square feet.
Looking ahead, Emaar MGF has ambitious plans to develop over 200 hotels in the next 7-9 years. Their collaboration includes two equal joint ventures with Accor to establish 100 budget hotels and a partnership with Premier Inn for 80 hotels. Furthermore, they have entered into independent management agreements with reputable brands like Hyatt, Intercontinental, and JW Marriott, for managing a total of 26 hotels.