LN Mittal, the richest Indian, has made an investment of $75 million, or Rs 300 crore, in Indiabulls Properties Investments Trust (IPIT), a subsidiary of Indiabulls Real Estate Ltd. Mittal has acquired 3.9 per cent stake in the trust.
IPIT, the first Indian real estate investment trusts (REIT) that has decided to list on Singapore Stock exchange, plans to mop up US $ 235 million through divestment of around 13.3 per cent stake. The issue is likely to open in the third week of May. The new trust that was incorporated, as business trust on May 7 2008, would be valued at around $1.8 billion equivalent to Rs 7,200 crore the offer price.
According to the draft prospectus filed with the Monetary Authority of Singapore, Mauritius-based Wellmark Investment Ltd, a firm "that invests on behalf of LN Mittal and family." has bought 91 million common units of IPIT for $75 million.
Other investment details could not be immediately ascertained. When contacted, an IPIT spokesperson said: "We cannot
comment since we have filed the prospectus with the Monetary Authority of Singapore."
An investment banker involved with the issue said on the condition of anonymity would be open for subscription in the next week. "We have received commitments from other long term institutional investors who want to participate in India’s real estate business. In case of Mittal investment it is already come into the trust," he said.
Unlike companies, REITs work on the model of annual rental income from the commercial and retail assets that it owns or buys from the open market including from the same group. IPIT has projected a net income of $38.5 million and $161.54 million in 2008-09 and 2009-2010 respectively
Some of the assets include Elphinstone Mills and Jupitor Mills which was acquired by Indiabulls Real Estate. The company had acquired 11 acres of Jupiter Mills land in Lower Parel, Mumbai, acquired for Rs 276.6 crore and 7.8 acres of Elphinstone Mills for Rs 441.75 crore.