IDB, Electra in Talks on Joint Venture in Indian Real Estate

Nochi Dankner's IDB group, anxious to increase its exposure to foreign markets, is moving into the Indian market. Subsidiary Property & Building is negotiating with Gershon Salkind's Electra Real Estate on the establishment of a joint venture that will focus on substantial investment in India in residential construction, office space and commercial space.

The companies plan to start with a $100 million investment in India. Formation of the joint venture is being led by the IDB group's real estate captain and Property & Building chair Rafi Bisker, and Electra Real Estate CEO Shlomo Sharf.

The two companies will each hold a 45-percent stake in the new venture, while a third Israeli partner already operating in the Indian market will hold a 10-percent stake. The venture will work with Indian real estate group Murugappa, which operates mostly in southeast India. The three companies are currently negotiating the construction of thousands of residential units and tens of thousands of square meters of commercial and office space, mostly in Chennai (formerly Madras), the capital of the southern state of Tamil Nadu, which has a population of 7.5 million. Dankner recently visited India and met with executives of the Murugappa group.

The Indian partner will hold a 10-percent stake in a planned second-stage joint venture. Murugappa has 28 subsidiaries and a payroll of 30,000. Its turnover is $1.5-2 billion annually.

For Property & Building, this is a huge leap forward in overseas operations. The company owns about a million square meters of income producing properties in Israel, however, Dankner has instructed all the companies in the group to focus on overseas operations.

Two years ago, with Bisker's entry into Property & Building, he instructed executives to revamp the company's revenue structure to a model where 50 percent of income stemmed from overseas investment. The company is a partner in a $2 billion Las Vegas construction project and is involved in the European market with Kardan. Property & Building ended the first half of 2006 with NIS 59 million net profits on NIS 389 million income.

This is Electra Real Estate's first major move in the Indian market, although most of its operations are overseas. The company has more than 700,000 square meters, mostly in the U.S., Canada, the U.K., Germany and Switzerland. Electra ended the first half of 2006 with net profits of almost NIS 62 million.

Bisker and Sharf have cooperated in the past, including in a venture with income producing assets in Europe and recently with the construction of Ra'anana office towers where technology companies SAP and Emblaze have offices.