An edited version of this story first appeared in DNA Money edtion on Saturday, April 23, 2011.
Mumbai-based real estate player, Omkar Realtors and Developers Pvt Ltd, is in the process of raising private equity to part fund its residential and commercial developments in the city. The company management is in the advanced stages of discussions with potential investment firms and is likely to close the deal within a couple of months from now.
Confirming the development, Deepak Mishra, head – sales and marketing and official spokesperson for Omkar, said, “Talks are currently on with a select few private equity investments firms. I can’t disclose any details at this moment though because it will create confusion and we’d like to avoid that situation.”
The private equity placement, according to Omkar management, will be at the entity level wherein the company will off-load minimum stake. “We have a very good pipeline with banks and financial institutions and have tied-up over Rs 1,000 crore from them. So I don’t really need to off-load a majority / large stake in the company. Secondly, most of our assets will be unleashed only in the next two to three years thus it is in our interest to divest minority stake as a benchmarking process to get a financial partner on board,” said Mishra.
When inquired about the extent of funds to be raised and if the sum was anywhere in the Rs 400 to 500 crore bracket or more, Mishra said, “It should be in and around that figure.”
A closely held company, Omkar’ registered a turnover of Rs 262 crore (top-line) last year. The company expects to grow this number to Rs 10,000 crore in the next 3-4 years. “That’s our internal target,” he said.
Having already developed and delivered 2mnsft of residential and commercial projects, the company has a pipeline of nine projects across different pockets in Mumbai. In all, the realtor has 20mnsft (saleable) of projects under various stages of development of which 10mnsft will be launched within this calendar year. In fact, the company has already launched approximately 2mnsft in the market and another 2mnsft is work in progress.
Elucidating their pricing strategy, Mishra said that both projects have been very attractively priced and rates are significantly lower than those charged by the nearest competition. “It’s a standard approach in our company as we believe ticket size and speed of sales is inversely proportional – higher the price slower the selling pace. Our business approach is to create, deliver, exit and move on to newer developments by selling our inventory in the shortest time-frame,” he said.
Among its marquee projects in Mumbai include residential-cum-commercial development at Worli (on the erstwhile Crest House land parcel) which it had earlier acquired. With a saleable area of 2.5mnsft, the residential development will have saleable area of 2mnsft and the balance (0.5mnsft) has been earmarked for commercial space with a proposed five-star premium / luxury hotel. Featuring 500 units, the company has already got on board London-based architectural firm ‘Foster + Partners’ and is positioning the residential apartments as top-of-the-line living spaces with a ticket size of Rs 6-7 crore.
Another high-end residential-cum-commercial project with a saleable area of 2.5mnsft in Malad is currently in the pre-launch stage. The company has already appointed channel partners, international property consultants (IPCs), brokers etc. to soft-launch and expect to officially open it for public sales in another three months. The project will offer 2/3/4 BHK apartments (1,100 units) spread across 1,200 to 2,200sqft. This development will also have 0.5mnsft of commercial space which will be launched at a later date.
The total investment required to construct projects under various stages of development is in the region of Rs 6,000 crore, of which the Worli development itself will absorb Rs 3,500 crore.
Mumbai-based real estate player, Omkar Realtors and Developers Pvt Ltd, is in the process of raising private equity to part fund its residential and commercial developments in the city. The company management is in the advanced stages of discussions with potential investment firms and is likely to close the deal within a couple of months from now.
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| Deepak Mishra |
The private equity placement, according to Omkar management, will be at the entity level wherein the company will off-load minimum stake. “We have a very good pipeline with banks and financial institutions and have tied-up over Rs 1,000 crore from them. So I don’t really need to off-load a majority / large stake in the company. Secondly, most of our assets will be unleashed only in the next two to three years thus it is in our interest to divest minority stake as a benchmarking process to get a financial partner on board,” said Mishra.
When inquired about the extent of funds to be raised and if the sum was anywhere in the Rs 400 to 500 crore bracket or more, Mishra said, “It should be in and around that figure.”
A closely held company, Omkar’ registered a turnover of Rs 262 crore (top-line) last year. The company expects to grow this number to Rs 10,000 crore in the next 3-4 years. “That’s our internal target,” he said.
Having already developed and delivered 2mnsft of residential and commercial projects, the company has a pipeline of nine projects across different pockets in Mumbai. In all, the realtor has 20mnsft (saleable) of projects under various stages of development of which 10mnsft will be launched within this calendar year. In fact, the company has already launched approximately 2mnsft in the market and another 2mnsft is work in progress.
Elucidating their pricing strategy, Mishra said that both projects have been very attractively priced and rates are significantly lower than those charged by the nearest competition. “It’s a standard approach in our company as we believe ticket size and speed of sales is inversely proportional – higher the price slower the selling pace. Our business approach is to create, deliver, exit and move on to newer developments by selling our inventory in the shortest time-frame,” he said.
Among its marquee projects in Mumbai include residential-cum-commercial development at Worli (on the erstwhile Crest House land parcel) which it had earlier acquired. With a saleable area of 2.5mnsft, the residential development will have saleable area of 2mnsft and the balance (0.5mnsft) has been earmarked for commercial space with a proposed five-star premium / luxury hotel. Featuring 500 units, the company has already got on board London-based architectural firm ‘Foster + Partners’ and is positioning the residential apartments as top-of-the-line living spaces with a ticket size of Rs 6-7 crore.
Another high-end residential-cum-commercial project with a saleable area of 2.5mnsft in Malad is currently in the pre-launch stage. The company has already appointed channel partners, international property consultants (IPCs), brokers etc. to soft-launch and expect to officially open it for public sales in another three months. The project will offer 2/3/4 BHK apartments (1,100 units) spread across 1,200 to 2,200sqft. This development will also have 0.5mnsft of commercial space which will be launched at a later date.
The total investment required to construct projects under various stages of development is in the region of Rs 6,000 crore, of which the Worli development itself will absorb Rs 3,500 crore.
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