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Blog January 20, 2016

Private Equity Investments in Realty tops $5 Billion in 2015 – India

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Private Equity Real Estate (PERE) firms deployed over $5 billion in Indian real estate companies and projects – the highest since the financial crisis of 2008.

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Private Equity Real Estate firms made 90 investments in India during 2015 and of these, 85 transactions had an announced value of $5.06 billion, according to research from Venture Intelligence.

 

 

 

While the activity level was 20% higher compared to the 75 investments in the previous year, the transaction values spiked significantly compared to 2014 that had witnessed reporting of $2.2 billion across 57 deals with announced value.

 

The Venture Intelligence study pointed out that 2015 witnessed several Joint Venture platforms being created between large investors and established developers. Standard Chartered announced that it will invest Rs 2,000 crore in Tata Realty & Infrastructure to form a Rs 3,000-crore investment platform to buy commercial assets across the country.

During the year, Goldman Sachs also committed Rs 1,850 crore to a 74:26 joint venture with listed developer Nitesh Estates again focused on commercial real estate assets. Warburg Pincus invested $175 million in a JV with the Embassy Group (which invested $75 million) to build warehouses across the country.

 

During the year, Goldman Sachs also committed Rs 1,850 crore to a 74:26 joint venture with listed developer Nitesh Estates again focused on commercial real estate assets. Warburg Pincus invested $175 million in a JV with the Embassy Group (which invested $75 million) to build warehouses across the country.

 

Piramal Realty attracted minority equity investments of Rs 900 crore from Goldman Sachs and Rs 1,800 crore from Warburg Pincus to be used for its residential projects in Mumbai. StanChart PE, IFC and ADB together decided to invest Rs 1,280 crore for a 70% stake in a joint venture with Shapoorji Pallonji Group that will focus on the affordable housing segment.
Among the bigger transactions in 2015 was Blackstone’s buyout of Gurgaon-based builder Alpha G: Corp for Rs 1,600 crore. The deal marks the first full buyout of a real estate company in India. Singapore sovereign wealth fund GIC formed a joint venture with DLF Home Developers, a wholly-owned subsidiary of publicly listed DLF, to invest $300 million or INR 1,990 crore to develop projects in two land parcels acquired by DLF in Delhi.
Residential projects accounted for over 71% of the investments by volume and almost 80% including townships during 2015, followed by commercial projects with a 10% share of the pie, the Venture Intelligence data showed.

PE-RE firms announced 25 exits during 2015 compared to a total of 24 exits announced during 2014. 17 of exits were through buybacks which was followed by secondary sale which accounted for five exits and strategic sale that accounted for two exits.

 

 

Blackstone’s acquisition of 247 Park at an enterprise value of INR 1,050 crore paved way for the exit of existing investors Milestone Capital and listed construction firm HCC. Milestone Capital, via IL&FS Milestone Fund, had invested Rs 575 crore in 247 HCC Park in June 2010 and held 74% in the property with the rest being held by HCC.

 

Among buybacks, a wholly owned subsidiary of publicly listed Prestige Estates Projects paid over Rs 876 crore to acquire a 62.54% stake in Exora Business Park from Red Fort Capital helping the PE firm exit its March 2011 investment. Among secondary transactions, New Vernon exited Chennai-based IT Park SP Infocity – a JV formed with Shapoorji Pallonji in which New Vernon later acquired the complete stake – via sale to CPPIB for $220 million.

 

 

Via: ET
RESIDENTIAL:COMMERCIAL REAL ESTATE INDIA
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