DE Shaw invests $250 Mn in HDIL unit

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Mumbai: Mauritius based hedge fund DE Shaw has made an equity investment of $250 million (Rs 1,000 crore) in Mack Star Marketing, a unit of Mumbai based Housing Development & Infrastructure (HDIL), a realty developer. This is considered one of the major private equity or hedge fund deals in India.

Mack Star is developing nearly 0.5 million square feet of commercial complex, Kaledonia, in Andheri, a Mumbai suburb. A week ago, HDIL sold the development rights of Kaledonia to Mack Star for Rs 900 ($225 million) crore at around Rs 18,000 per square feet.

Since regulators were tightening realty funding and norms for public issue and external commercial borrowings coming under increased scrutiny, Indian developers have immensely preferred private equity (PE) funding,

In 2007, the Indian real estate sector received nearly $2.6 billion PE funding in 32 deals, an Assocham study says. PE deals are expected to touch $48 billion in 2010.

HDIL had completed nearly 80 percent of the project and made a profit of 70 to 75 percent before tax. The company had bagged the project under the Slum Rehabilitation Scheme three years ago.

Under the scheme, one million square feet of space was to be developed with 0.5 million square feet for slum rehabilitation and the remaining 0.5 million square feet going to the developer.

DE Shaw is the fifth largest hedge fund in the world with assets worth $29 billion. In India, last year, it invested nearly $400 million in DLF Assets, a group company of property developer DLF, and $15 million in Soham Renewable Energy.

HDIL has a land bank of 132 million sq ft in the Mumbai region. The company posted a turnover of Rs 1,444 crore and Rs 702 crore of profit after tax for nine months ended December 31, 2007.

HDIL has been shortlisted for the Dharavi slum rehabilitation project in association with investment bank Lehman Brothers and has recently bagged a slum rehabilitation project of the Mumbai International Airport (MIAL).

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