Blackstone may sell stake in Bain Capital
2023.01.24 02:24
Blackstone may sell stake in Bain Capital
By Kristina Sobol
Budrigannews.com – The Blackstone Group According to two sources, is in talks with private equity firm Bain Capital to sell approximately half of its stake in India’s largest real estate investment trust Embassy Office Parks in a deal that could be worth up to $480 million at current prices.
If the deal goes through, it would be the first time Bain, based in the United States, had invested in a REIT in India. There, office space is attracting investors because many workers have returned to work since the COVID-19 pandemic ended. As Blackstone adjusts its portfolio, it would entail a further sale of its Embassy stake.
According to the sources, Reuters is still in the early stages of the negotiations. According to the initial source with direct knowledge of the situation, the plan is to carry out the transaction through block deals on Indian stock exchanges in the coming weeks. However, neither a timetable nor a pricing has been established yet.
Bain Capital and Embassy did not respond to requests for comment, and a spokesperson for Blackstone declined to comment. Because the discussions are private, the sources did not wish to be identified.
In 2019, India’s first REIT to list was Embassy Office Parks. It is the largest office REIT in Asia by area and owns and operates more than 43.2 million square feet of office parks and buildings in cities like Bengaluru and Mumbai.
Similar to mutual funds, real estate investment trusts (REITs) manage real estate assets. They use the rent they collect from the properties they manage to pay investors dividends.
Blackstone currently owns 24% of the Embassy REIT, which is worth nearly $4 billion on the market. According to the sources, the private equity group intends to sell approximately 10% to 12% of it. Depending on Monday’s closing price of the Embassy REIT on the Mumbai stock exchange, that will be worth $400 million to $480 million.
Following sales in 2020, 2021, and 2022, this will be Blackstone’s fourth stake sale in Embassy: a block trade. Blackstone sold the REIT to investors, including the Abu Dhabi Investment Authority, for $400 million in September.
India’s economy has rebounded since the COVID pandemic to become one of the major economies growing at the fastest rate in the world, despite concerns about inflation.
This month, Knight Frank reported that between October and December, the Asia-Pacific market’s office rental growth was strongest in Bengaluru and Mumbai, and that office rentals in Indian cities are expected to rise over the next year.
Over the course of the past ten years, Bain Capital, which oversees assets worth more than $160 billion worldwide, has already invested more than $3 billion in India, investing in prominent Indian private lender Axis Bank.
Blackstone is all about making money.
According to the first source, Blackstone would have sold units in the Embassy REIT worth $1.4 billion over the past three years if the deal with Bain were to be completed.
“Churning its capital is Blackstone’s strategy to reduce its Embassy stake. “Blackstone is looking at investing in emerging asset classes like retail and data centers where the returns can be higher,” said Shobhit Agarwal, chief executive of Anarock Capital. “Office assets in India have matured.
“It is putting down a bet on the homegrown utilization story.”
Agarwal added that Blackstone is still bullish on the Indian real estate market despite selling its stake in some REITs and investing in new assets.
Over the years, the American group has invested more than $11 billion in Indian assets and businesses.
