Zhitong Finance APP has learned that, according to two sources, Blackstone (BX.US) is negotiating to sell half of its shares in Embassy Office Parks, India’s largest real estate investment trust company, to private equity firm Bain Capital. The deal is worth as much as $480 million. Negotiations are still at an early stage, the source said. The plan is to execute the trade through block trades on Indian stock exchanges in the coming weeks, but timing and pricing have yet to be finalized.
A spokesman for Blackstone declined to comment, and Bain Capital and Embassy did not respond to requests for comment.
The deal is understood to mark US-based Bain Capital’s first real estate investment trust (REIT) investment in India. Office space in India is attracting investors as the COVID-19 pandemic recedes and many employees have returned to the office. For Blackstone, this will mean further reducing its stake in Embassy as it adjusts its portfolio.
Specifically, Blackstone currently owns 24% of Embassy REIT, a fund with a market capitalization of nearly $4 billion. The private equity group plans to sell about 10%-12% of the stake, the sources said. That would be worth $400 million to $480 million, based on Embassy REIT’s closing price on the Bombay Stock Exchange on Monday.
A Bain deal would see Blackstone sell $1.4 billion worth of Embassy REIT over the past three years, according to the people familiar with the matter.
Shobhit Agarwal, CEO of Anarock capital, said: “Blackstone cut its stake in Embassy to raise a lot of capital. Office assets in India have matured, and Blackstone is considering investing in emerging asset classes such as retail and data centers, which may have higher returns. “
Agarwal added that while Blackstone is selling some stakes in REITs, it is also investing in new assets, a sign that it continues to be bullish on the outlook for Indian real estate. It is understood that Blackstone Group has invested more than $11 billion in Indian companies and assets over the years.
The blockbuster deal will be the fourth time Blackstone has sold its stake in Embassy, following three sales in 2020, 2021 and 2022. Last September, Blackstone sold $400 million of Embassy REITs to investors including the Abu Dhabi Investment Authority.
In addition, Bain Capital manages more than US$160 billion in assets globally. In the past 10 years, the company has invested more than US$3 billion in India, including Axis Bank, India’s leading private bank.