Hindustan Construction Company (HCC), a construction company is planning to raise Rs. 5000 crores for investing in HCC Real Estate Limited, its real estate arm through a combination of private equity participation, FCCB issue and a possible IPO. The company is also mulling setting up its own real estate fund for India.
The funds will be used to expand the company’s real estate business in India, which will include developing a land bank of about 5000 acres, building IT parks and other commercial spaces and large townships.
HCC has been traditionally into mega power projects and tunnels. It has recently started giving more thrust to its real estate, roads and infrastructure projects. Over the years, the company’s margins have been declining due to the dwindling share of power in its order book, and rising cost of raw materials. The company at present has six hydro power projects in its portfolio. Real estate, on the other hand, presents an exciting opportunity, with higher purchasing power and an economy growing at a fast pace.
The company will focus on developing townships outside Mumbai and start developing IT parks in Mumbai, Navi Mumbai and Thane, apart from the ongoing project to develop 2 mn sq. ft. of IT park in Vikhroli. With an investment of Rs. 500 crores in developing the IT Park, the company is expecting revenues worth Rs. 100 crores a year. Within the city, the company will also undertake slum redevelopment projects covering an area of 4 mn sq. ft. in Maharashtra in the Mumbai Metropolitan region.
Read The Financial Express article.
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