The Competition Commission of India (CCI) today approved a real estate deal between global private equity giant Blackstone group and Pune-based realty firm Embassy Group.
The proposed deal involves Blackstone and Embassy group having joint control over an entity engaged in the business of development and management of commercial and office space and related activities.
In an order released today, CCI said the deal is unlikely to have any "appreciable adverse impact on competition in India and therefore the Commission hereby approves the proposed transaction."
While the exact size of the deal has not been disclosed, it has been billed as one of the biggest realty deals in the country's commercial and office space real estate business.
As per the proposed deal, certain Singapore-based entities of Blackstone would get compulsorily convertible debentures of Pune Dynasty Projects Private Ltd -- currently 51 per cent owned by Embasy Property Developments Ltd (EPDL).
Upon conversion of these debentures, Blackstone Group would get 50 per cent stake in Pune Dynasty Projects Private Ltd (PDPPL) and would have joint control with Embassy group firm EPDL over the assets, business and affairs of PDPPL.
Mauritius based financial investor Alta Vista currently owns the remaining 49 per cent stake in PDPPL, which is proposed to be acquired by Embassy before the Blackstone deal.
Accordingly, PDPPL would become a wholly-owned subsidiary of Embassy group prior to the deal with Blackstone group.
The concerned parties had approached CCI on August 24 to seek the fair trade regulator's approval for the deal, after execution of their investment agreement dated August 14.
Later, CCI had asked the entities involved in the deal to remove certain "defects" and furnish additional details.
Giving its clearance, CCI said Blackstone is engaged in businesses like asset management, financial advisory, private equity funds, realty funds, hedge funds and mutual funds.
EPDL is primarily engaged in the business of real estate development and related consulting services, property leasing, among others. It mostly provides construction development and property management services in Bangalore and Pune.
Blackstone also holds certain investments in enterprises engaged in the business of development and management of commercial and office space in Pune and Bangalore.
However, the combined market share of Blackstone-invested companies and Embassy group in eight major cities of India, including Pune and Bangalore, is in single digits and the proposed combination would not be "significant enough to give rise to any adverse competitive concern," CCI said.
The regulator further said that "there are no significant entry barriers in the market for development and management of commercial and office space in India" and therefore no adverse impact was likely on the market competition.