Eredene Capital PLC
31 July 2007
Eredene Capital PLC
* To invest up to INR 1,312 million (GBP 16.4 million) in low income housing
projects on the outskirts of Mumbai
Eredene Capital PLC (Symbol: ERE), the AIM quoted Indian real estate investor,
today announces that its wholly-owned subsidiary Aboyne Mauritius Limited
(together "the Eredene Group") has entered into an agreement to invest up to INR
1,312 million (GBP 16.4 million) in the development of up to approximately
185,000 low income residential units on the outskirts of Mumbai where there is
rising demand for affordable homes within commuting distance of the city.
Under the terms of the agreement, the Eredene Group will acquire an equity stake
in Matheran Realty Private Limited ("MRPL") which will provide a 55% economic
interest and will provide 49% of the voting rights. MRPL, a newly formed
company specialising in residential real estate development targeted at low
income groups, will build the residential units in eight development locations
in the Mumbai Metropolitan Region. The Mumbai Metropolitan Region comprises
about 4,000 square kilometres, covering the city of Mumbai, Navi Mumbai, Thane
and other hinterland areas.
Construction work on the first project is expected to commence in 2008. The
first pre-sales of residential units constructed by MRPL are also expected to
commence in 2008. The last of the developments are due to be completed within a
period of ten years.
MRPL is a joint venture between a company promoted by Mr Max Fysh and the Silvex
Group. Mr Fysh is an Australian entrepreneur with exclusive focus on Indian real
estate and a background in Asian institutional investments and finance with
Mercury Asset Management and Merrill Lynch in London. The Silvex Group has over
25 years of land and property development experience in the Mumbai market and
strong local expertise. MRPL's management have been progressing this project for
the last three years by accumulating options and other rights over a significant
land bank. MRPL benefits from a 10-strong land acquisition team, supported by
leading international project managers, architects and construction firms.
A study conducted by McKinsey in 2003 estimated strong demand for low income
housing in Mumbai. Significant road and rail improvement projects are expected
in and around Mumbai over the next five years making the selected locations more
attractive as residential areas in terms of the transport network and employment
opportunities. These projects include the new international airport at Panvel
and the Mumbai Trans-Harbour Rail Link, which will reduce the commuting time
from central Mumbai to Mumbai's Southern and Central suburban areas by
approximately half in some locations.
An initial investment of GBP 6.2 million will be made immediately, with a
further GBP 4.1 million to be invested over the next few months. These first two
tranches will give the Eredene Group a 45% economic interest in MRPL. The
remaining GBP 6.1 million payment is at the Eredene Group's option and would
take the Eredene Group up to a 55% economic interest.
MRPL has secured the rights in India to utilise a patented construction
technology developed in Australia on a preferential cost basis. This
construction technology is particularly suited to developing country
environments and has been deployed successfully on a large scale in the
Philippines. A typical low income home developed by MRPL will have a build area
of approximately 250-400 square feet and be priced in the forecasted range of
US$7,500 to US$10,000.
In order to provide access to affordable housing finance, MRPL has developed
strong relationships with leading commercial banks, housing finance corporations
and microfinance institutions
Commenting on the investment Alastair King, Chief Executive and founder of
"There is a shortage of affordable homes for the estimated 30% of Mumbai
Metropolitan Region's 18 million people who earn a salary of US$2,500 per annum
or less. Based on their extensive experience in the residential real estate
market in Mumbai, the management of MRPL have put together an attractive
proposition to address this need that includes well connected locations, low
cost construction methods and affordable mortgage options."
"This is Eredene's first investment since we announced in June that we were
becoming a self-managed investment company and broadening our investment
- ends -
Eredene Capital PLC Tel: +44 (0)20 7621 6880
Alastair King (Chief Executive) www.eredene.com
Bridgewell Limited Tel: +44 (0)20 7003 3000
Redleaf Communications Ltd Tel: +44 (0)20 7822 0200
Emma Kane / Samantha Robbins / Anna Dunkin
Notes to Editors
* Following the full investment in Matheran Realty Private Limited, Eredene
will have committed approximately 30% of the net funds raised in April 2006.
* Eredene is a self managed investment company investing in Indian real estate.
* Nikhil Naik heads Eredene's project team of five in India. Nikhil Naik was
formerly the head of P&O Ports India and headed P&O Ports' South Asia and
Middle East Division as Regional Director. With P&O Ports, he led the team
that developed and operated three of the largest private container terminals
in India. Mr Naik has a highly successful record developing and managing
large investment projects throughout South Asia.
* Further information is available at www.eredene.com
This information is provided by RNS
The company news service from the London Stock Exchange