GIC in JV with Anant Raj Industries

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SINGAPORE-BASED investment management firm GIC is forming two separate joint ventures (JV) with Delhi based infrastructure development group Anant Raj Industries. GIC, which manages funds worth $100 billion and is among the world’s top ten real estate investment firms, would hold 49.9% stake in both the ventures, while Anant Raj would hold majority stake.

While one venture would get engaged in developing hotels, the other would be involved in setting up IT parks and other infrastructure projects.

The exact amount of investment has not been frozen yet and would depend on the number of projects being undertaken. Typically, a five-star hotel project would cost anywhere between Rs 200 crore to Rs 1,000 crore to build depending on the location and the cost of the land. Even if the venture sets up 10-15 hotels, it would cost anywhere between Rs 2,000-15,000 crore. Given a debt to equity ratio of 2:1 for such projects, the JV could be pumping in equity worth $150 million-$1.2 billion for the hospitality JV alone.

The JV for hotels would set up four and five-star hotels across India which is expected to be up and running in the next two months, while the other venture would be floated within the next 5-6 months.

GIC had last month picked up 8.5% equity in Anant Raj Industries through a preferential allotment in a deal valued at Rs 432 crore. Anant Raj Industries’ director, Amit Sarin, confirmed the developments and added, “Apart from funds, association with GIC would bring expertise in developing hospitality and other real estate projects.”

Hospitality and IT parks are the main focus areas for Anant Raj which has traditionally banked on rentals from commercial properties. Anant Raj has been in negotiations with international hotel chains for striking a partnership for its existing five hotel projects lined up in and around Delhi. According to the understanding reached between GIC and Anant Raj, the Indian partner would be free to develop hotel and IT parks on its own.

Real estate space in the country has witnessed a slew of such mega joint ventures. These include Dubai-based Emaar Properties’ joint venture with Delhi-based MGF, the DLF-Nakheel venture and Ansal’s JV with Deyaar. These apart, there are separate hospitality JVs including DLF-Hilton, Carlson-Unitech and Accor-Emaar MGF among others.

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