Ambani reports Sh2bn profit from Kenya real estate

Mr Mukesh Ambani. Photo/File 

By John Gachiri

In Summary

• Ambani’s Reliance Industries in 2007 entered into a joint venture with Delta Corporation, which has developed high-end office blocks and a mid-to-low cost residential estate in Nairobi.
• Delta Corporation now says it plans to exit its real estate investments to venture into hospitality and gaming businesses.

Indian tycoon Mukesh Ambani’s real estate projects in Kenya have earned him Sh2 billion profit nearly a decade since entering the country, the chief finance officer of his local subsidiary, Delta Corporation East Africa, has revealed.

The billionaire businessman’s Reliance Industries in 2007 entered into a joint venture with Delta Corporation, which has developed high-end office blocks and a mid-to-low cost residential estate in Nairobi.

Delta Corporation now says it plans to exit its real estate investments to venture into hospitality and gaming businesses.

“We have done exceedingly well in Kenya and we almost doubled our money. We had invested 70 crore (Sh974 million) in 2007 and total inflow from Kenya is in the region of 140 to 145 crore (Sh1.95-Sh2 billion),” said the Delta Corp chief finance officer Hardik Dhebar in an interview with CNBC.

“It has been a good investment and a good exit,” he added.

One of the landmark projects by Delta Corp is the Delta Centre, located in Nairobi’s Upper Hill, which was sold to the World Bank Group for close to Sh2 billion.

Another one is the 21-storey twin-tower Delta Corner in Westlands, which was sold to consultancy firm PwC and the University of Nairobi’s Staff Pension Scheme for a reported Sh4 billion.

Delta Riverside, a gated complex of four office-blocks targeting small and mid-size companies, has also sold off but Delta Corp did not disclose how much it made from the project.

READ: Ambani breaks ground for another office tower

Mr Ambani’s Reliance Industries controls 60 per cent of the joint venture with Delta Corp, whose annual report for 2012-2013 shows that the firm made net profit of Sh453.8 million from its Kenyan subsidiary, compared to the previous year when net profits attributable to the Kenyan operations stood at Sh510 million.

Delta said that it will gradually exit the Kenyan market as soon as it sells all projects which also include residential property.

“DCEAL has already completed construction of Delta Plains, a mid- to low-cost residential complex at Athi River near the Jomo Kenyatta International Airport.

This relatively-industrialised area is being considered an upcoming residential hub due to its proximity to both the airport and the city,” said the annual report.

“The returns have been good and the added cash flow will aid further growth of our gaming and hospitality business,” Delta Corp chairman Jaydev Mody said in a statement.

The firm expects to close shop by the end of the year. It had also bought 10 plots in prime locations covering an estimated 27 acres.