Colliers International has acquired an eighty-percent controlling interest in Bangalore-based project management firm Synergy, with the management of the newly acquired firm set to take the helm of the real estate service provider’s India operation.
Through the acquisition, Toronto-headquartered Colliers will more than triple its current workforce in the country to 1,400 professionals working across 16 offices, while enhancing its project management and design services in the country.
“Not only does the partnership turbo-charge our growth in India by aligning with a market leader, it gives us another engine to help us grow by leveraging the relationships that Synergy has with leading players in the industry,” Colliers’ CEO for Asia Pacific, David Hand, told Mingtiandi.
Sankey Prasad, who co-founded the project management company sixteen years ago and announced his intention last year to make Synergy a $100 million company by 2020, has assumed the role of managing director and chairman for Colliers in India.
Colliers former managing director for India, Joe Verghese Pallath, left the company in June, while former deputy managing director Saacketh Chawla moved to Singapore to head the company’s project management business for Asia in 2017.
Colliers Targets Growth in India
“Our firm has an unmatched track record of completing complex projects for the largest and most sophisticated developers, financial institutions, corporates and governmental agencies in India,” Prasad said.
Works in progress for the company include design and build responsibilities for a 2.8 million square foot business park in Bangalore on behalf of Embassy Group, which earlier this year partnered with Blackstone to launch India’s first REIT, as well as the project management of 1.36 million square feet of office space for Salarpuria Sattva Group in the same city.
The deal enables Colliers to extend its reach in India at a time when global investments in the country are on the rise, with institutional investments in office space in the country surging 592 percent from INR 105 billion between 2009 and 2013 to INR 622 billion for the period from 2014 through 2018.
“India is a huge success story,” Hand said. “The fastest growing economy in the world, foreign companies are expanding in India because of the business-friendly environment, a workforce that is young, talented and cost effective, and the tech company boom.”
Management Stake Could Grow With Performance
Under the terms of the deal, Colliers’ new local management team could expand their stake in the operation, depending on the growth of the business, with Colliers’ 80 percent ownership potentially shrinking to 75 percent, according to Hand.
As recently as 2017, Blackstone was said to have a 17.5 percent interest in the Bangalore company. While declining to comment on other investors’ investments or the financial details of the transaction, Hand confirmed that under the terms of the acquisition Colliers and the senior leadership of Synergy are now the only owners of the business in India.
Blackstone officials had not replied to enquiries by Mingtiandi by the time of publication.
Colliers’ decision to expand their presence in India through acquisition of a project management firm has parallels with the strategy that the Toronto-base consultancy pursued in China with its buy-out of Shanghai-based SIP last year.
In that deal, which was announced in March 2018, Colliers acquired the 25-year-old industrial project management firm for an undisclosed sum in an effort to enhance the range and depth of services that it provides to clients in mainland China.
In addition to enhancing the consultancy’s services to industrial occupiers and investors, Colliers pointed to the deal’s addition of 110 project managers to its existing team of 15-16 people as a benefit of the transaction.
Project Management Success Brought Blackstone on Board
Established in 2003, Prasad’s Synergy initially focused on managing office fit-out projects for the likes of Microsoft and Google during Bangalore’s commercial real estate boom at the turn of the millennium.
“When we started, project management – where a company is the single-point of contact for a client on projects – hadn’t really been done before in India, and the uniqueness of what we were offering helped us to build up a big portfolio in a relatively short amount of time,” Prasad told Mingtiandi.
With close to 280 million square feet of orders in the pipeline, Synergy has delivered over 120 million square feet of projects across the commercial, retail, hospitality, industrial and aviation sectors.
In 2008, Synergy attracted attention from foreign investors including KKR, Blackstone and a Canada pension fund all of which showed interest in acquiring a stake in the company, according to Prasad.
Blackstone eventually acquired a 35 percent interest in Synergy for INR 560 million ($7.9 million), which was the private equity company’s first investment in India, according to The Economic Times of India.
The US firm divested 50 percent of its interest two years ago under a buy-back arrangement.
India Commercial Investment Momentum
The merger is the latest play by a global real estate company in a country that has seen a flurry of transactions involving commercial real estate over the past two months.
Just four days ago, Blackstone was said to have signed a deal to acquire, in partnership with Salarpuria Sattva, a 90-acre tech park for INR 27.7 billion ($390 million) from Coffee Day Enterprises.
That deal was reported just over a week after Blackstone agreed to acquire the remaining 50 percent in the commercial property portfolio of Indiabulls Real Estate for INR 44.2 billion ($620 million).