arun

With the property market sky rocketing, real estate and infrastructure has become attractive investment destination for private equity (PE) funds, beating traditional new economy heavyweights—IT & ITeS, banking & financial services (BFS) and pharma & healthcare.

For the first half of 2007, real estate and infrastructure development sector accounted for $2.2 billion investment or about one-third of all PE money flowing into India. While IT & ITeS maintained its top position in terms of the number of PE deals, real estate and infrastructure development sector became the most sought after in terms of value of actual PE investment. The total value of PE money accounted by IT & ITeS sector stood at $1.2 billion which was more than one-third of the total. Real estate sector was a distant second with $601 million worth PE deals, followed by BFS which attracted $508 million.

Some of the big deals in the real estate sector this year are Avenue Capital’s 26% stake in SKIL Infrastructure for $500 million, DE Shaw’s $400 million investment in DLF Assets, IL&FS’ $100 million in QVC Realty, Morgan Stanley Real Estate’s $150 million in Oberoi Constructions, Singapore-based GIC, George Soros and Morgan Stanley joint investment of $166 million in Anant Raj Industries and TPG-Axon Capital’s $100 million investment in DivyaSree Developers.

One of the reasons behind the growing investment in the real estate sector is the valuation of the companies engaged in the sector, which has shot up over the last two years. During 2005, when PE and VC funds started making noticeable investments in India, there was just one PE deal related to the real estate sector which involved Indiabulls. IT & ITES was number two in terms of actual PE investment even as it recorded the maximum number of PE deals. IT & ITeS emerged stronger in the last calendar year when it not only clocked the highest number of PE deals—97 or one fifth of the total—but also attracted most of the PE money—$2.9 billion or about 14.3% of the total. It was followed by pharma, healthcare & biotech which registered PE investment worth $2.5 billion and telecom which attracted $2.2 billion investment.

Economic Times-26/07/07

amittewari

Private equity firm IL&FS Investment Managers Ltd, an arm of Infrastructure Leasing & Financial Services Ltd. (IL&FS), said it received $578 million (Rs2,277 crore) of commitments for investing in real estate projects as demand surges in the world’s fastest-growing economy after China. The Mumbai-based company, which had the first closure on its real estate fund on Wednesday, plans to raise up to $750 million mainly from global institutions over the next three months, said Shahzaad , vice-chairman, in a phone interview.
IL&FS will invest mainly in projects for housing, offices, hotels and complexes for information technology companies, with a small amount in stocks of unlisted real estate companies, said. Investors in the fund include institutions, pension funds, endowments and foundations, he said.
IL&FS joins JPMorgan Chase & Co., Housing Development & Finance Corp., ICICI Venture Funds Management and Sun-Apollo India Real Estate Fund Llc. in raising funds to invest in Indian property. The fund, with a maturity of between eight and 10 years, aims to offer annualized returns of about 25%, said.

kumar

With the changing time real estate and infrastructure is now in priority list of PE where as in past IT & ITeS, banking & financial services (BFS) and pharma & healthcare were the favorite one. This is good sign for real estate and infrastructure.

rajani

Indian real estate is on boom from more than 5 years.
I think it will remain as it is for 10-15 more years.