Former software services company SSI sells its real estate

Prasad V Potluri, an NRI serial entrepreneur with an appetite for deal-making, has agreed to take complete control of Chennai-based real estate company SSI in a deal valued at Rs 900-1,000 crore. Mr Potluri will buy the Kalpathi Suresh family’s 70.85% stake in SSI and make an open offer for up to 20% to other shareholders. The price being paid for the shares is not known but SSI’s market price of Rs 157.70 means that the promoter holding in the company is worth about Rs 646.57 crore. Mr Potluri is expected to pay a premium. If the open offer is successful, it would take the deal value to close to Rs 1,000 crore. The deal has been concluded and an announcement is expected soon. SSI, formerly a software services and IT education firm, has substantial real estate holdings in Chennai including a 70 acre property in Chennai’s Perambur area which it bought from the defunct Binny Mills Corporation. It also owns a hotel in Ooty and a 37-acre property near Mahabalipuram. Real estate transactions have been getting pricier in recent times as funds flush with cash look to take advantage of soaring property rates. Real estate companies are busy raising money to build more office complexes, townships and residential apartments. In the last year alone, three major high value transactions have taken place all of them involving foreign funds and local developers. JP Morgan invested Rs 274 crore in Lodha Builders and Morgan Stanley signed an agreement with Mantri to invest Rs 300 crore. And then Morgan Stanley agreed to invest more than Rs 675 crore in Oberoi Constructions.