Blackstone will buy the royal arm of CCD

BENGALURU: Blackstone, together with the southern developer Salarpuria Sattva, has signed a letter of intent to acquire Tanglin Developments, the real estate company of Coffee Day Enterprises (CDE), the parent company of Cafe Coffee Day (CCD), and which has a technology Park in Bangalore - for Rs 2,600,000,000 rupees, the company said in a presentation at the exchanges. The agreement is the first major divestment that helps reduce the debt of Rs 6,547 million after the suicide of founder V G Siddhartha last month.

The closing of the transaction is subject to the completion of Blackstone's due diligence, documentation and receipt of the required regulatory approvals, which are expected in 30-45 days, CDE said in a statement. The company also announced the sale of the subsidiary AlphaGrep Securities to Illuminati Software for Rs 28 crore. The board, in fact, has thanked Blackstone for its professional and transparent approach and its rapid response time in adverse market conditions.

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The payment by Blackstone, once the transaction is closed, will be made in several installments. The first tranche of Rs 2,000-2,200 million rupees will be paid immediately, while the remaining money will come in the next 24 months, said one of the sources informed about the transaction. The agreement is made through a special purpose vehicle where Blackstone will own approximately 90% and Salarpuria will retain the remaining 10%. The investment bank MAPE Capital is the advisor in the agreement.

One of the people involved said that the pace at which the agreement was made also underlines Blackstone's understanding of the commercial real estate market, and emerged as a white gentleman at a time of a broader liquidity crisis in the market. “The Blackstone team saw an opportunity and moved very quickly in the transaction. In less than 10 days, an agreement of Rs 3,000 crore was reached, ”said the source. TOI had reported in March that the Blackstone-Salarpuria combine is in talks to buy the technology park for Rs 2.8 billion rupees. Siddhartha suspended the talks when he began focusing on the sale of the flagship coffee retail chain to Coca-Cola and ITC, but revived last month. The money will be used to pay the debt.