US-based investor KKR is winding down its real estate-focused non-banking financial company (NBFC) it floated along with Singaporean sovereign fund GIC in the country in 2015, said sources in the know.
“KKR could not scale up the real estate book in the recent years in the aftermath of NBFC liquidity crunch and they are planning to focus on equity investments now,” said sources in the know.
Sources said that KKR also tried to bring in investors for its real estate NBFC – KKR India Asset Finance (KIAFL) – but it could not do it due to unknown reasons.
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A mail sent to KKR’s public relations agency did not elicit any response.
NBFCs faced severe liquidity crunch after mutual funds stopped refinancing the their loans immediately after the IL&FS defaults in 2018.
The KKR’s NBFC is said to have a loan book of Rs 4,000 crore and has lent to developers like Lodha group, Runwal group, Signature Global, among others, in the past.
Last year, Yesh Nadkarni, managing director & CEO of KKR’s India real estate lending business, quit to join Piramal Enterprises as chief executive officer of wholesale lending in Piramal Capital & Housing Finance (PCHFL).
Many finance companies such as Edelweiss and Indiabulls sold their real estate loans to global investors like Oaktree and SSG Capital to derisk their books, and reduce the risky developer loans. Piramal group took over stressed lender DHFL.
A senior executive at a Mumbai-based conglomerate said that debt strategies have not worked well for KKR in India and it is known for equity strategies and buy outs globally.
“Normally, they put in 10-20% and bring in third-party funds. I think they have not been able to raise subsequent funds in NBFC,” he said.
InCred and KKR, in July last year, announced the conclusion of the strategic merger of InCred Financial Services (InCred Finance) and KKR India Financial Services (KIFS), it’s NBFC focused on business credit.
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“Real estate credit has not worked in India well. Many such as Edelweiss, Piramal, Indiabulls have slowed down their wholesale real estate credit in the aftermath of IL&FS defaults,” said the executive quoted earlier.
In 2021, Hong Kong-based stressed asset specialist Ares SSG Capital acquired Altico Capital India, which used to lend to real estate developers.