Chinese Co. Fosun eyes Rs 800 Cr. stake in Nitesh
Times of India, January 4, 2018: https://timesofindia.indiatimes.com/business/india-business/chinese-co-fosun-eyes-rs-800-cr-stake-in-nitesh/articleshow/62359279.cms
Shanghai-based Fosun Group is in advanced discussions to invest Rs 800 crore ($125 million) in southern developer Nitesh Estates in what would be the Chinese conglomerate’s first M&A deal in the Indian real estate sector.
Billionaire Guo Guangchang-led Fosun, with more than $75 billion in assets, is likely to pick up around 50% stake as it looks to build a property platform to expand in the country, people directly familiar with the matter said. This would be Fosun’s second buy in India after snapping up controlling shares in Hyderabad-based Gland Pharma in a billion-dollar deal last year.
Nitesh plans to issues shares to Fosun Property Holdings and IDERA Japan, which is controlled by the former, through preferential allotment. The Bengaluru-based company’s founder Nitesh Shetty will retain 25% and continue to run operational management. The potential transaction would trigger a mandatory open offer by the company to public shareholders, though there are no delisting moves afoot now.
JM Financial, Yes Securities, Cyril Amarchand Mangaldas and EY are said to be advising on the deal-making. Shares in India’s first Ritz Carlton hotel will not be part of the transaction as the first generation entrepreneur Shetty plans to keep it as a part of his personal investments. Similarly, Nitesh Hub mall in Pune, which is majority-owned by Goldman Sachs, is also not part of the ongoing deal with Fosun. When contacted, a senior Fosun India official and Nitesh Shetty declined to comment.
Nitesh has a portfolio of 20 million sqft of completed and underdevelopment residential and commercial projects. The company plans to use the proceeds to pare debts and fast track under development projects delayed by adverse market conditions. Going forward, Fosun would co-invest with Nitesh Estates to acquire property assets to expand the Indian real estate footprint. Three years ago, Fosun made a similar entry into Japanese real estate industry by acquiring mid-size asset manager IDERA Capital Management, which owned office buildings in greater Tokyo.
Fosun is one of the largest conglomerates in China with presence across pharmaceuticals, mining, finance, insurance, real estate and entertainment sectors. Fosun has been the most prolific overseas acquirer from China in the past five years with a string of purchases, including French holiday group Club Mediterranee, UK’s Thomas Cook Group, Cirque du Soleil of Canada, US insurer Meadowbrook, Greek jeweler
Folli Follie and Australia’s Roc Oil.
Fosun has been on the prowl for real estate assets in New York, London, Milan, Moscow and Tokyo in recent past. It floated a joint venture acquisition vehicle with European investment firm Resolution Property and counts iconic addresses such as London’s Lloyd Chambers, Milan’s Palazzo Broggi, One Chase Manhattan Plaza and the historic Voentorg building adjacent to Kremlin in Moscow in its portfolio.