KKR forms new NBFC for realty lending

KKR, the global investment firm, has formed its second non-banking financial company…

KKR, the global investment firm, has formed its second non-banking financial company (NBFC) for the Indian market, with an investment from Singapore’s sovereign wealth fund GIC. The new platform will provide structured credit to the country’s real estate sector, the company said in a statement on Thursday.

The amount to invested by GIC has not been disclosed.

Through its first NBFC, KKR provided solutions across the capital structure. Since 2009, KKR has extended more than $2 billion of structured financing to 21 business groups in India.

Ralph Rosenberg, the global head of KKR Real Estate, said, “We are excited to assist a sector that is still under-built. While many lenders provide debt to this sector, there is a need for solution-oriented, non-dilutive capital for property developers. We intend to fill that gap and contribute to India’s residential and commercial real estate sectors.”

Sanjay Nayar, CEO of KKR India, said, “This sector-focused NBFC further enables KKR to provide tailored financing solutions to companies, and adds to our established private equity and lending businesses.”

After launching a dedicated real estate platform in 2011, KKR has committed over $1.8 billion of equity to 29 real estate transactions in the US, Europe and Asia.

In 2014, KKR initiated the real estate business in India by structuring and participating in three transactions with an aggregate amount of $190 million. In private equity space, KKR has been active in India since 2006, with total equity investments exceeding $1.5 billion.

Even Singapore sovereign wealth fund GIC has been betting big on India. Last month, GIC announced its plans to acquire a majority stake in Nirlon, in a deal that could well be over Rs 1,250 crore. This was the second deal signed by the fund in Indian real estate in a week. In mid-December, an affiliate of GIC had entered into a joint venture with Gurgaon-based Vatika Group to develop two residential projects in Gurgaon with development potential of over 2.3 million sq ft.

In September 2014, GIC had tied up with Bangalore’s Brigade Group for a Rs 1,500-crore joint venture for residential development in south India, and prior to that in November 2013, it had launched Ascendas India Growth Programme at S$600 million along with business space solutions provider Ascendas, to invest in the real estate sector in India.

Anshuman Magazine, chairman and managing director of CBRE South Asia, said, “The GIC-KKR venture signifies confidence in the Indian real estate landscape. The move will ease liquidity crunch that real estate companies find themselves in and improve companies’ access to finance. Additionally, such deals will also provide construction finance to real estate companies for commercial projects, which typically is a challenge for the industry”.

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