Isle of Man: Island Aids India´s Biggest Developer In Latest Expansion

Last Updated: 1 August 2008

Isle of Man based Hirco Plc, the investment vehicle for Hiranandani, is a fine example of an Indian family firm with a long and distinguished history that has flourished in the face of global competition in the international marketplace.

Hiranandani is India's largest developer of prestigious mixed-use townships for the country's increasingly affluent middle class. Sister operations have significant international interests – including the world's tallest residential tower under construction in Dubai.

Hirco raised £362.6 million net in its initial public offering on AIM, the London Stock Exchange's alternative investment market, in late 2006 becoming the largest ever real estate investment IPO. By 30 September 2007, the net asset value of the company had risen to £469.7 million.

£350.8m investment

Within just ten months of its IPO, Hirco had invested approximately £350.8 million in new mixed-use township developments in Chennai and Panvel, India, representing about 97 per cent of the funds raised in the IPO.

The company's CEO Priya Hiranandani is expected to be on the Island for the company's AGM in April. Ms Hiranandani has had several lead roles in the family's group of businesses, including founder and CEO of Zenta, a business process outsourcing company. She is also a former recipient of the Indo-American Society for Young Entrepreneurs award.

Over the past 25 years, Hiranandani – founded by its chairman, Niranjan Hiranandani - has created 30 million square feet of mixed-use townships in India. Hirco is now building on this formidable track record and leading the way in creating exciting, sustainable and quality new communities that offer India's growing middle class a modern lifestyle at an affordable price.

Rapidly growing market

Over the next two decades, India's middle class is expected to grow rapidly – from 50 million to 583 million people – creating the world's fifth-largest consumer market. Average household incomes are predicted to triple in this period. India's huge middle class will be concentrated in urban areas and the Government believes building large integrated townships from scratch is the only solution that provides the scale for meeting both housing and infrastructure needs.

India's economic boom over the last two decades has created strong demand for both residential and commercial properties. Its property market was estimated at US$54 billion at the end of 2007 and is expected to grow to over US$142 billion by 2012. This burgeoning Asian market is hugely important to Britain – as was demonstrated during the visit of UK Prime Minister, Gordon Brown, and a party of leading British businessmen earlier this year. As the jurisdiction with the greatest number of non-UK companies registered on AIM, the Isle of Man is playing a key role in aiding such blue chip operations gain access to the world's main money markets – to the extent that the Island was recently described as a 'core asset of the City' by London's Lord Mayor.

Island offers 'value and price'

Banking and insurance are two of the key sectors being targeted, together with retail, construction and others operating at the value-added, quality end of the market. The fact that Isle of Man financial services compete on value as well as price in an open market is an obvious attraction for Indian companies expanding into Western Europe and beyond.

While initially considering an Isle of Man HQ from an international tax planning perspective, companies such as Hirco soon realise the Island offers a great deal more than a highly advantageous zero corporate tax regime, pointed out local businessman, Nigel McGowan, a non-executive director of the company.

Quality corporate package

'The Isle of Man can now offer the highest all-round corporate package for an operation like Hirco. In recent years we have seen more high profile, discerning companies choosing the Isle of Man as a base, both for employing staff here or working via professional service providers.

'One thing that is clear is that the Island's professional firms now have a recognised reputation for quality and can integrate with City professionals to deliver the client's objectives.'

He added that this was consequently resulting in a more substantial role for Isle of Man directors who were increasingly called upon to provide significant input, even in a non-executive capacity. Mr McGowan visited India recently to attend a board meeting and to see progress at Hirco's latest developments in Chennai and Mumbai.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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