Warburg, Runwal plan $1 billion realty play

In the largest real-estate investment platform transaction set to be concluded this year, private equity major Warburg Pincus is poised to enter into an alliance with developer Runwal Group to invest $1 billion in retail-led mixed-use development across the country, said two persons with direct knowledge of the development. The joint platform will see both the entities infusing around $250 million each as their equity contribution, while the rest will be through leveraging. “This ($500 million) would just be the initial contribution as both the entities are open to investing more and expanding the size of the investment platform. Further investments and upping the platform size would depend on future growth opportunities,” said one of the persons mentioned above. Under this venture, Warburg and Runwal are looking to build a portfolio of 15-20 retail-led properties in tier-I and II Indian cities over the next five years. Apart from building own properties, the platform would also be looking at acquiring operational and partially-completed projects. A new team will be formed to manage the efforts of this proposed platform that will build, own and operate retail-driven properties. For starters, the platform will acquire stake in Runwal’s few operational properties and projects that are part of the development pipeline. The developer’s 0.5-million-sq-ft R Mall in Thane will be the ready and operational property to be moved into the proposed portfolio. Runwal’s proposed mixed-use development on 8-10 acre in Dombivli near Mumbai will also become a part of this platform. Nearly 1 million sq ft retail project as part of the over 20 acre development in Pune and a proposed development on a 3-acre land parcel in Mumbai’s western suburb Andheri will also be shifted under the platform. The company is developing over 1million sq ft project, including 7 lakh sq ft office space and 3.5 lakh sq ft retail space, on this 3-acre Andheri land parcel.