Shapoorji Pallonji Real Estate rejigs top deck-OxBig News Network

Sriram Mahadevan, managing director of SPRE’s mid-income housing platform Joyville, will be CEO in addition to his current position. Sumit Sapru, SPRE’s earlier business head, will also be CEO. 

Venkatesh Gopalakrishnan, who was MD and CEO before the rearrangement, will now be managing director, SPRE, and director, group promoter’s office. Both CEOs will report to him.

The restructuring comes ahead of an initial public offering that the 160-year-old infrastructure-to-energy conglomerate Shapoorji Pallonji Group is planning for its real estate holding company.

“Projects have been split between the two CEOs to oversee, who manage the operational profit and loss statement. They also have joint responsibilities on the overall portfolio. This is part of the company’s talent development plan towards creating a stronger leadership bandwidth to manage the growing scale of business,” one of the two people mentioned above said on the condition of anonymity. 

Gopalakrishnan will focus on the planned IPO, future-proofing the organization and retain overall responsibility for the real estate business to shareholders and other stakeholders, the two people said.

“This will ensure operational efficiencies as well as focus on the IPO and other strategic initiatives,” the person mentioned above said. 

An SPRE spokesperson didn’t respond to an email seeking comments. 

After a restructuring exercise

The leadership rejig follows a restructuring exercise at Shapoorji Pallonji’s real estate business that concluded on 30 July last year when SPRE was formed as a new real estate holding company. 

Before that, Shapoorji Pallonji Group developed residential projects under the Shapoorji Pallonji Real Estate brand; mid-income housing projects under Joyville; and office parks under the SP Infocity label. SPRE as a holding company brought all real estate assets of the group under one umbrella. 

With this, the new holding entity owns around 45 land parcels and projects, Mint had reported on 3 November. 

The promoters are keen to make real estate one of the biggest businesses in the Shapoorji Pallonji Group, Gopalakrishnan told Mint in an interview last year. 

With nearly 2,000 acres in the five major property markets—Mumbai, Pune, Bengaluru, Gurugram and Kolkata—and large parcels in Mysuru and Nagpur, SPRE’s land and ongoing projects are valued at about ₹50,000 crore. The land bank will help create a massive portfolio with a total development potential of around 140 million sq. ft.

SPRE plans to list in the next two years or so, raising $800-900 million by offloading 10-12% of its stake initially. Later, further dilutions will take the public float to 25%, resulting in a total fundraising of around $2 billion, the Mint report said.

The company plans to expand its presence in a residential market currently dominated by the four public listed developers – DLF Ltd, Godrej Properties Ltd, Macrotech Developers Ltd and Prestige Group. 

“SPRE is aiming for $1 billion turnover in 2025-26, with more than a dozen launches of new projects,” the first person said. 

For SPRE to scale up, it would need to raise funding, the second person added. “Even if the IPO happens later, they can raise money either through non-core land sale or project-level funding in the time-being ,” the person said.

Leadership roles in realty firms

As real estate companies expand faster than ever before, and look at multi-city growth, developers have been structuring leadership positions and responsibilities accordingly. 

Bengaluru-based Prestige Group has appointed business heads and CEOs for each vertical and geography where it operates. Similarly, Godrej Properties has designated zonal CEOs. Every project is like an operating unit, with a project director and a leadership team to monitor profitability, customer satisfaction, and other quality metrics throughout the project lifecycle.

Gulam Zia, executive director at property advisory Knight Frank India said that as a part of their business process re-engineering, many real estate developers are hiring professionals to lead business verticals, positioned either regionally or based on product categories. 

“Beyond the office, residential and retail asset classes, further segregation based on product categories are also shaping up. For instance, luxury housing needs an independent P&L, CEO or business head to succeed, and mixing it with affordable housing can be a recipe for disaster. The CEOs for such portfolios are then fully accountable for that vertical, and can grow it with better efficiencies,” Zia said.