Blackstone Eyes Residential Rental Foray In IT Hubs With Kolte-Patil Acquisition

Private equity firm Blackstone is venturing into the residential rental business with the acquisition of Kolte-Patil Developers Ltd. The New York-based investment firm — with assets over $50 billion in India under its belt — is set to acquire a 66% equity stake in the Pune-based realtor as part of its diversification plan for real estate investments in the country.

Blackstone will initially acquire a 40% stake in Kolte-Patil through promoter stake acquisition and equity infusion and plans to increase its stake to 66% by purchasing an additional 26% through an open offer to minority shareholders. The existing promoters will retain a 33.81% stake in the company.

So far, Blackstone has primarily invested in platforms catering to commercial real estate, retail assets, office spaces, data centers, and warehousing. The Kolte-Patil acquisition provides Blackstone a foothold to expand into the residential rental business and acquire future assets in this sector.

Kolte-Patil has a strong presence in Pune, recognized as an IT hub in Maharashtra. The company is also making inroads in Mumbai and Bengaluru. The company is expected to transition from residential sales to student housing and rental housing targeted at the IT workforce in key service markets such as Pune, Bengaluru, and Mumbai.

The Pune-based real estate company is net debt-free, with Rs 1,181 crore in gross debt being offset by Rs 634 crore in cash and cash equivalents. It has 32.38 million square feet of area available for development, and projects with revenue potential of Rs 23,850 crore.

With Blackstone at the helm alongside the existing management, Kolte-Patil is anticipated to shift its focus from being a residential player in the middle and premium real estate segments to becoming a platform for housing assets in the rental housing business.

For Blackstone, this acquisition represents the creation of a new platform in India. While it has some prior experience in residential properties through its collaboration with the Embassy Group, this move allows Blackstone to develop a dedicated platform for scaling Kolte-Patil towards the rental housing sector. As per Blackstone’s strategy, the platform is expected to be monetised using the Real Estate Investment Trust, or REIT, model in the future.