Mauritius-based firms, Landmark Special Opportunities Company (LSOC) and Landmark Real Estate Fund (LREF), are set to acquire approximately 60% equity in Kolkata's Forum Ventures for close to Rs 100 crore, according to a source familiar with the transaction.
Details of the Investment
- This undertaking will involve issuing 10 crore new equity shares, which will then be transferred to the two companies from Mauritius.
- LSOC is expected to invest just above Rs 88 crore, while its fellow partner LREF will contribute around Rs 11.7 crore.
Mechanics of the Deal Both LSOC and LREF will channel their investments into Forum Ventures through their subsidiaries based in Mauritius, identified as LSO Subco and LREF Subco. Notably, Forum Project Holding, affiliated with the Forum Group, possesses about 37% of Forum Ventures, focusing on realty development, rental leases, property management, and other related services.
Previous Investments To date, LSOC has injected approximately $75 million across various real estate projects in India, while LREF's total stake in the Indian real estate sector amounts to $9.3 million. Forum Ventures is structured as a holding entity, planning to leverage the funds acquired from these Mauritian backers for future investments in real estate, which includes potential investments in Forum ETA Realty. Forum Ventures itself owns a 26% share in Forum ETA, which is gearing up to establish an information technology hub near Kolkata.
Context of the Investment This strategic investment emerges at a time when the real estate industry is grappling with a liquidity crunch, as potential buyers and investors show reluctance. Not long ago, real estate held notably high valuations, bolstered by substantial land banks. However, a marked downturn in stock market values has led to a drastic shrinkage in the valuations of listed entities. This situation has made private equity firms and international real estate funds proceed with more caution regarding their investments in the sector.
Shifting Interest Interestingly, some international firms are turning their attention to smaller, unlisted companies. For instance, Israeli construction firm U Dori Group has recently announced a plan to acquire a 50% share in a residential project through a joint venture with the Surana Group from Hyderabad for Rs 125 crore.