PE cos shine in downcast real estate sector

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Debojyoti Ghosh, Ajay Sukumaran: Bangalore, Aug 16 2011, 02:58 IST

Tags: PE | Sunil Rohokale | Investment | Richard Ellis

The realty index is down over 12% in the last week, key policy rates have increased many times over the last 15 months, raw material costs are on the upswing as a result of inflation and homebuyers are cautious. In short, the Indian realty mart is shrouded in uncertainty.

However, for real estate developers looking for growth capital, there seems to be a silver lining over this cloud of uncertainty as the sugar daddies of the financial world, the private equity (PE) funds, are lining up multiple investments into key city residential projects across the metros.

Most PEs are channeling their funds into residential projects with ticket sizes ranging between R50 lakh and R1.5 crore.

“We will be closing three to four deals in the next two months, which will be of R75-125 crore ticket size in Mumbai, Bangalore, Delhi and Chennai,” said Sunil Rohokale, executive director, Ask Investment Holdings, which has raised two domestic realty funds of R350-550 crore in the last two years.

The R350 crore fund has already made six investments, while the R550 crore fund, which was raised in the last six months, is looking at mid-size residential projects in Mumbai, Bangalore, Pune, Chennai and Delhi that can be completed in six years. “We are only looking at residential projects of 5-15 acres. Normally of the size of R50-1.5 crore range flats,” Rohokale added.

“It (PE investment) is filling a certain gap, but it is not going to resolve the liquidity issue,” said Anshuman Magazine, chairman and MD of CB Richard

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