BANGALORE, MUMBAI: Bangalore-based Embassy Property Developments is in talks with global financial services group JP Morgan to raise Rs 500 crore for two projects in the city.The negotiations are expected to firm up over the next few weeks, persons familiar with the matter told ET, adding that the ongoing talks pertain to a premium villa project and a IT-cum-residential development on Bellary Road.“The valuation exercise is on, as is figuring out other key investment details like the quantum of stake dilution. Embassy is willing to divest up to 20% stake at project level ,” said one of the persons, who did not wish to be named.Jitu Virwani, chairman and managing director of Embassy Group, which had recently clinched India’s biggest, commercial, real-estate transaction with private equity firm Blackstone , refused to comment on the ongoing talks. JP Morgan’s Yesh Nadkarni, head of India Real Estate Investing, Global Opportunities Group, told ET, “As a matter of policy, we do not comment on the investments that we have made or about any potential transaction .”Embassy is building 1,100 units ranging from Rs 1.4 crore to Rs 2 crore in its villa project on Bellary Road, where it is also coming up with a IT-cum-residential development spread over 20 million sq ft. The builder, which has delayed its Rs 2,400-crore public issue, recently raised $200 million (over Rs 1,000 crore) from Blackstone for a 50% stake in three of its business parks in the city.Blackstone also pumped in Rs 135 crore in a special purpose vehicle to develop a residential-cum-retail project on a 14-acre plot in Hebbal and Rs 540 crore in Manyata Embassy Business Park— the country’s largest operational tech special economic zone.Bangalore has outpaced bigger realty markets such as Mumbai and Delhi, mainly due to greater percentage of end-users among buyers than in the other cities and a relatively moderate price escalation.“Bangalore has been a priority market for private equity funds as investors perceive it as steadier. The city is considered least speculative and risky among the metros, with real job growth and a larger spread of good developers,” said Rajeev Bairathi , director, investment advisory at DTZ India.JP Morgan has been investing in the Indian real estate sector since 2005, first from its proprietary book and a year later also from an asset management division that it launched for third-party investments. It is likely to invest in Embassy through its own proprietary book, one of the persons said.In 2012, Bangalore’s real estate saw a slew of private equity transactions, including the Rs 500 crore-deal between Baring Private Equity Partners India and RMZ Corp. Red Fort Capital pumped in Rs 200 crore in Prestige Estates Projects while GIC, the sovereign investment arm of the Singapore government, invested Rs 105 crore in the Brigade Enterprise-HUL land deal.Embassy has eight residential projects totalling 10.56 million sq ft and 63 commercial properties with a developable area of 36.95 million sq ft under development. It has so far developed close to 25 million sq ft, focusing mostly on business parks.