BWI: Gandhi City to Raise US $25 million through PEs

Press release from Business Wire India
Source: Gandhi City
Friday, May 27, 2011 04:47 PM IST (11:17 AM GMT)
Editors: General: Consumer interest; Business: Banking & financial services, Business services, Information technology; Technology
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Gandhi City to Raise US $25 million through PEs


New Delhi, Delhi, India, Friday, May 27, 2011 -- (Business Wire India) -- Gandhi City for Advanced Research & Development Ltd, which has received approvals to set up the country's first R&D based Special Economic Zone (SEZ), will shortly raise US $25 million, as the first phase of investment for the project.

Two top Private Equity (PE) firms have already evinced interest in investing in Gandhi City, which is in the process of creating an ecosystem to foster collaboration between the industry, institutes and research organizations near Ramanagara, 30 kilometers from the technology hub of Bangalore.

The SEZ project will have four phases of investment, spread across 10 years, to raise US $600 million through various routes. "The total project outlay is Rs 2,620 crore. Our plan is to replace minor investors by bringing in PE funds. It will be equivalent to 9 per cent of the total share-holding of Gandhi City," says Giri Devanur, Promoter, Gandhi City SEZ.

The process of acquiring 350 acres of land for the project is on. The Karnataka Industrial Area Development Board (KIADB), the nodal agency for land acquisition in Karnataka, will complete the process shortly. The SEZ will be spread over 1,000 acres, housing research labs, incubation centers, and high-end technology testing facilities.

Gandhi City will focus on multiple disciplines, such as, Pharmaceutical and Life Sciences; Automotive and Aviation; Technology and Communications, and Agricultural sciences, in association with educational institutions. It is the first of its kind SEZ modeled on the lines of Stanford Research Park, US. Gandhi City SEZ has entered into a technological understanding with Research Triangle Park, US.

SEZs in India are facing several challenges, the major being hassle-free land acquisition. "Land acquisition is taking political overtones in various states; the challenge is even more daunting. The country still pursues a nearly 150-year-old legislation to acquire lands. With amendments to the Land Acquisition expected during the next session of Parliament, we hope there will be relief to SEZ projects," Giri Devanur notes.

As per the SEZ policy, the promoter should directly acquire 70 per cent of the land while the government should acquire the remaining 30 per cent. However, problems with respect to the 30 per cent are plenty - land acquisitions, compensation issues, and political interferences - have delayed the SEZs.

Another hurdle is funding, as banks finance only infrastructure, utilities, and roads, within the SEZ, but not the SEZ as a whole. "This is a strange guideline, as projects within the SEZ, such as research labs and innovation centers, should have access to capital markets and bank loans," points out Giri Devanur.

As an industry expert, Giri Devanur recommends to the government to prioritize the following to enable industrial manufacturing SEZs to move on fast track.

-- Strengthen land acquisition process by legislating it.
-- Fix responsibility on government to acquire 30 per cent of land once the SEZ promoters acquire the other 70 per cent.
-- Promote SEZs in hinterland, 50 kms away from cities and towns to discourage real estate firms.
-- Minimum size of a SEZ - 500 acres.
-- Relax banking and funding guidelines.

About Gandhi City

Spread across 1,000 acres near the technology hub Bangalore, India, Gandhi City SEZ aims to create an ecosystem to foster the right collaboration between the industry, institutions, and research organizations. The total investment set to flow into the project is Rs 2,620 crore in association with major technology partners. Giri Devanur is the promoter of Gandhi City, a premier R&D SEZ, the only such project in the nation. Devnaur is a computer engineering graduate from the University of Mysore, India. He also studied at the premier Massachusetts Institute Technology (MIT), Cambridge. Giri Devanur is the founder of Ivega, a specialist IT services provider. He successful expanded the company, in terms of growth and revenue, and sold it to TCG.


CONTACT DETAILS
Giri Devanur, Gandhi City, +91 9741879999, giri.devanur@gandhicity.com

KEYWORDS
CONSUMER, BANKING, BUSINESS SERVICES, IT, TECHNOLOGY

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