Indian Property Investments by Private Equity Rise 69% in 2011

Jan. 11 (Bloomberg) -- India’s property investments by private-equity firms rose 69 percent last year, according to Venture Intelligence, a research company that tracks private equity, and mergers and acquisitions.

Private equity made $2.68 billion of real-estate investments through 53 transactions in the country, Chennai, India-based Venture Intelligence said in an e-mailed statement late yesterday, based on deals that have been announced. In 2010, they spent $1.58 billion on 55 investments, it said.

Indian developers are chasing private-equity funds because of a liquidity squeeze after sales dried up, and banks and finance companies cut funding. Private-equity deals are getting transacted at internal rates of returns, or the yield of the investment, of 25 percent to 30 percent, Amit Goenka, national director of capital transactions at the Indian unit of London- based Knight Frank LLP, said Sept. 15.

The largest investment last year was Jeff Morgan Capital Ltd.’s $320 million in Compact Disc India’s film city project. Other major deals included Warburg Pincus LLC’s 14 billion rupee ($270 million) investment in a residential joint venture with Lemon Tree Hotels and Blackstone Group LP’s $200 million investment in Bangalore’s Manyata Embassy Business Park. Housing projects accounted for 57 percent of the transactions, while commercial projects made up 19 percent, the study showed.

A total of 69 private-equity investments were made in India’s real-estate market in 2011, of which 53 were announced. In the previous year, 55 of the 63 deals were publicly disclosed.

Divestments

Buyout firms made 19 exits last year. A total of 14 were announced with a combined value of $603 million, Venture Intelligence said, compared with eight in 2010, it said.

HDFC Property Ventures Ltd., which accounted for five of the exits, sold its stake in the Embassy Property Developments Ltd.’s information technology park in Bangalore in south India back to the developer for 4.9 billion rupees in a deal funded by Blackstone. HDFC also divested its two-year-old investment in Nitesh Estates Ltd.’s Bangalore mall project back to the developer for 4.5 billion rupees.

Kotak Realty Fund realized $86 million from its stake sale in Peepul Tree Properties Pvt., a commercial information technology park in Mumbai, to Tata Realty Initiatives Fund. Kotak also sold a 20-acre land parcel in the south Indian city of Chennai that it had acquired from the Pentamedia Graphics group in February 2007. Indiareit Fund Advisors Pvt. and Red Fort Capital Advisors Pvt. also reported exits during the year, Venture Intelligence said.

Source: http://www.businessweek.com/news/2012-01-11/indian-property-investments-by-private-equity-rise-69-in-2011.html