Citi Lines Up Billion-dollar Realty Blitz

By: Propertiesmls

Amid the frenzy of real estate deals, Citi, the world's largest financial services group, has quietly sewed up half-a-dozen property deals worth over $400 million in the past few weeks. The group is also in the process of signing other major deals, including a joint venture with mortgage leader HDFC and US-based Portman Holdings. Citi, which is the single-largest foreign direct investor in India's financial services industry, is readying itself to invest over $1 billion in the real estate sector here, sources told ET.

Citigroup is stepping in through Citigroup Property Investors (CPI) India, a Mauritius-based company financed by a fund in Cayman Islands with limited liability. CPI India has raised $500 million through an India-dedicated fund, mainly from the US pension funds and high net worth individuals, and is an aggressive player here. Sources said it may raise more funds to invest in realty.

Sources said Citigroup will invest in FDI-compliant projects in Mumbai, Delhi, Chennai, Bangalore and Pune. 'It has concluded 4 deals over the last couple of weeks, and invested over $150 million, with the total commitment running into $400-500 million. It is also ready to sign another 4-5 deals, involving equity sharing with local companies,' they added.

CPI India has teamed up with HDFC and Portman to float a JV, which will set up a large five-star facility in Mumbai, with a cumulative capex of $250 million. HDFC is likely to invest through its real estate fund and pick up 5%, while Portman will pick up another 5%, sources said. The remaining 90% will be held by CPI India.
The group has also joined hands with a Delhi-based real estate company to set up an IT park in Noida. It will invest up to Rs 80 crore in the 50:50 JV, according to sources. CPI India has also set up a 50:50 JV with Pune-based Gera Developments for a residential project in the city.

Citigroup is also looking at developing 5-6 hotel projects, with two being finalised in Bangalore and Chennai through a Chennai-based company. Initial investments could go up to $100 million.

The group has been bullish on residential, commercial, hospitality and special economic zone (SEZ) projects in India. The group is being advised by FoxMandal Little, a Delhi-based law firm. Citigroup was earlier planning to tap India's real estate through the foreign venture capital (VC) fund route, and had approached the RBI with a proposal. However, RBI has not allowed any foreign VC funds in real estate so far and has over a dozen applications pending.

Apart from Citigroup, many other foreign funds floated by groups like Blackstone, Goldman Sachs and JP Morgan are either taking exposure in domestic VCs or directly in FDI-complaint real estate projects.

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