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Blackstone Group is reportedly in talks to sell around half of its stake in India's largest real estate investment trust, Embassy Office Parks, to private equity firm Bain Capital. The deal, which is still in the preliminary stage, could be worth up to $480 million, based on Monday's closing price of the Embassy REIT on the stock exchange in Mumbai. The transaction is expected to be executed through block deals on Indian stock exchanges in the coming weeks, though a timeline and pricing have not been finalized.
The potential deal between Blackstone and Bain Capital is a clear indication that office space in India is attracting investors, following the decline of the COVID-19 pandemic. The sale of Blackstone's stake in Embassy Office Parks would also mark Bain Capital's first REIT investment in India, as it continues to expand its portfolio globally.
Embassy Office Parks is India's first REIT to list and is also the largest office REIT in Asia by area, owning and operating over 43.2 million square feet of office parks and buildings in cities such as Bengaluru and Mumbai. Office space in India is attracting investors, as many workers have returned to the offices with the waning of the COVID-19 pandemic.
Blackstone currently owns 24% of the Embassy REIT, with a market capitalization of nearly $4 billion, and plans to sell about 10-12% of its stake, worth $400 million-$480 million. The sale would be Blackstone's fourth stake sale in Embassy in the last three years, following sales in 2020, 2021, and 2022.
Bain Capital, which manages over $160 billion in assets globally, has already invested more than $3 billion in India in the past decade, including in leading Indian private lender Axis Bank. If the deal with Bain Capital goes through, Blackstone would have sold units worth $1.4 billion in the Embassy REIT over the last three years. Blackstone's strategy of paring its Embassy stake is to churn its capital, as office assets in India have matured and Blackstone is looking at investing in emerging asset classes like retail and data centers where returns can be higher.
Despite selling its stake in some REITs, Blackstone continues to remain bullish about the India real estate landscape, as it is also investing in new assets. The US-based private equity group has invested more than $11 billion in Indian companies and assets over the years. The Indian economy has rebounded since the COVID pandemic and is now one of the fastest growing major economies in the world, with Bengaluru and Mumbai recording the highest office rental growth in the Asia-Pacific market during October-December.
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