Financial services group Allianz has partnered with Shapoorji Pallonji Group to establish SPREF II, a rupee-denominated closed-ended fund to invest in the office market in the country.
Allianz will own 50 per cent of the platform, and the remaining will be held by like-minded long-term institutional investors. The fund is targeting to raise $500 million in equity.
This marks Allianz’s first real estate transaction in India and was conducted by Allianz Real Estate, the $63.5-billion real estate investment and asset manager within the Allianz Group, on behalf of several Allianz companies.
The deal forms part of Allianz’s strategy to allocate around five per cent of its global real estate portfolio to the Asia Pacific region.
Francois Trausch, Global CEO of Allianz Real Estate, noted: “India is strategic to the Allianz Group. In growth economies like China and India, real estate provides a scalable entry into the market for Allianz in terms of investments/asset management exposure.”
Portfolio strategy
The platform’s strategy will be to leverage structural trends in six tier-one cities to build a long-term, cash flow producing office portfolio by acquiring a blend of develop-to-core, forward purchases, and stabilized or stabilizing assets.
The six target cities are Mumbai, Bengaluru, Hyderabad, Pune, Chennai, and Delhi-NCR.
Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate, noted: “We are looking to deploy approximately 60 per cent of our Asia-Pacific allocation to growth economies. The Indian economy has been consistently outperforming. Strong secular growth, stellar demographic trends, and improving transparency are supporting stable real estate occupiers as well as investor demand, in particular the office sector which is ideal for long-term core investors like Allianz.”
“Shapoorji Pallonji’s developer/operator model is vertically integrated to oversee all aspects of deal sourcing, design and build, construction management, project management, asset management and investment management.”
Shapoor Mistry, Chairman of Shapoorji Pallonji Group, said: “We view this partnership with Allianz as the first step in a relationship which will focus on creating long-term value for the investors and will be supported by Shapoorji Pallonji Group’s substantial credentials and experience in delivering and managing real estate assets across key markets in India.”
The venture will be supported locally by the Shapoorji Pallonji Investment Advisors team led by Rajesh Agarwal.