HDFC Realty Fund invests 75 crs in Pune based real estate co.

HDFC India Real Estate Fund has bought a 10% stake in Pune-based real estate company Paranjape Schemes for Rs 75 crore. Private equity investor GE Capital has also signed a deal worth Rs 250 crore with the company for developing an integrated township project in Pune.

The funds infused by HDFC will be used for all upcoming projects of the company, while GE Capital’s investment is for a specific project in Pune, as reported by the Economic Times. Paranjape Schemes, which also undertakes construction activities and has completed over 100 projects, is also planning an IPO in the future.

HDFC India Real Estate, a real-estate fund having a corpus of Rs.1000 crs, was the first dedicated real estate fund launched in India in 2005. The fund has bought stake in another Pune based real estate developer Vascon Engineers. The fund has a mandate to invest in three broad classes of projects-those that are complete, those in the development stage and those in the planning stage.

Funds continue to be lured by the Indian Real Estate story

About $2.5 billion have been invested by overseas realty funds in India to date. And if that wasn't enough, wait to see another $3.5 billion running after the best real estate opportunities India has to offer.

Nearly two dozen US funds are raising $3.5 billion for investments in Indian realty. Those raising the money include Wall Street powerhouses such as Blackstone Group ( $1 billion) Goldman Sachs ($1 billion), Citigroup Property Investors ($125 million), Morgan Stanley ($70 million) and GE Commercial Finance Real Estate ($63 million). Others raising the money are: JP Morgan, Warburg Pincus, Merrill Lynch, Lehman Brothers, Warren Buffett’s Berkshire Hathaway, Colony Capital and Starwood Capital.

Theres been enough said and written on the increasing property prices in India. But that doesn't seem to deter these funds to make investments in the sector. The attraction for these funds is potential investment returns of 25% and more in Indian projects that might be hard to come by in the US and Western Europe today.

One such determined big player is Goldman Sachs. For about a year now, Goldman Sachs’s Whitehall Street Real Estate Funds have been exploring the Indian market and checking out potential investment partners. Some time back the California Public Employees’ Retirement System invested $100 million in a $400-million real estate fund promoted by IL&FS.

Tishman Speyer is among the first US developers to invest in India. Last year, the New York City-based firm formed a joint development company with ICICI Venture Funds of Mumbai that will have a war chest of $2.5 billion. Similarly, New York-based developer Vornado Realty Trust has teamed up with The Chatterjee Group, a venture capital firm also located in New York.

The Indian Real Estate story seems to be growing by the day and everyone wants to play a part in it.

Source: Financial Express

HDIL in talks with PE funds for pre-IPO stake sale

Mumbai-based real estate developer Housing Development and Infrastructure Limited (HDIL) is in talks with private equity and real estate funds such as ICICI Ventures, Kotak Realty and HDFC Realty for selling a 4% stake for about Rs. 550 crores. It is quite possible that these three firms together can subscribe to the pre-IPO portion.

HDIL is in the process of diluting 4% stake in the company as part of its pre-IPO placement. It plans to do an IPO to raise over Rs. 2000 crores some time soon. HDIL has developed approximately 72.8 mn square feet of saleable area and 5.5 mn square feet of rehabilitation housing area so far. The company is in the process of expanding its property development activities to other parts of India.

Article in The Economic Times.

Oberoi Constructions receives Rs. 675 crores from Morgan Stanley Real Estate Fund

Morgan Stanley Real Estate Fund has invested Rs. 675 crores (approximately $152 mn) in Mumbai-based Oberoi Constructions for an undisclosed stake. The private equity deal is said to be the largest in the Indian real estate sector. Fourteen other funds, including Blackstone, Carlyle, and GE, were in the race to acquire the stake in Oberoi Constructions. Morgan Stanley Real Estate Fund recently invested $67.4 mn in Mantri Developers. The fund looks at a return of more than 30% annually.

The company has projects lined up for Pune, Hyderabad and Bangalore for which it will acquire land. It has interests in both commercial and residential projects. It plans to diversify into shopping malls, hotels, hospitals and education centres. It has ongoing residential and commercial projects in Mumbai's suburbs - the Oberoi Mall in Goregaon, Oberoi Chambers and Garden Estate in Andheri, among others.

The real estate company has been valued at $1 bn by Kotak Mahindra Capital, the advisors to the deal. Anand Madduri, Executive Director, Morgan Stanley Dean Witter Asia, will be joining the Oberoi Constructions' board.

The real estate sector is growing at a whopping 35-40% and has seen large private equity deals in the last few months with nearly $350 mn in investments flowing into the sector. Siachen Capital has invested $100 mn in Bangalore-based Nitesh Estates, HDFC Real Estate has invested $35 mn in the Ansals IT City and Parks and another $31 mn in Pune-based developer Vascon Engineers. More than 20 funds are interested in the sector.

Read The Economic Times article for more details.