Unveiled: Why Ajay Piramal Pulled The Plug on Indiareit Deal
Contrary to media speculation, it was neither about valuation nor about boosting Piramal’s own real estate business
Just a month ago, it looked like a foregone conclusion that the Religare group would buy out Indiareit, a real estate venture fund owned by the Piramal group. Ajay Piramal, chairman of Piramal Enterprises, wanted to focus on real estate development and Malvinder and Shivinder Singh of Religare were looking to diversify their funds business.
And then, just when everyone was expecting the deal to be announced, it emerged that it had been called off. A section of the media speculated that Piramal wanted the fund to invest in his own projects, but the truth was unknown.
Here is the full story: Piramal waited for over six months for Religare to make up its mind on the deal and when the buyers kept postponing the final sign-off, he lost his patience and called off the deal.
Clearly, Indiareit is a trophy asset. It was one of the top performing real estate funds in the country and is one only five funds out of forty six in the country that has made any money .
Religare, on the other hand, does not have a real estate fund in its portfolio and was looking to add one.
Why did Piramal want to sell it in the first place? The answer to that is fairly straightforward. Last year, as he entered the real estate business, he wasn’t very comfortable with the conflict of interest that managing a realty fund and real estate business would bring about. Hence the decision to sell. As an industry insider says, “It was in keeping with his own high standards of corporate governance that he decided to sell.”
But this was a deal unlike others. For starters, Piramal, ranked 37 on Forbes’ India Rich List with a net worth of $1.75 billion, did not go about soliciting bids. No investment banker was involved in the process.
