Nevin John, Mumbai
The Economic Times


The US-based hospitality and real estate fund Walton Street Capital (WSC) has decided to invest Rs 1,000 crore in the booming Indian real estate market in 2008. It has already tied up with property developers for investing Rs 600 crore at the project level. These investments will be made in special purpose vehicles (SPV) floated specially to implement projects.

The fund is in talks with three Indian developers for the remaining investments which is expected in a couple of months, said WSC managing director Sourav Goswami.

Last year, the $13 billion Chicago-based WSC invested about Rs 800 crore in several SPVs, including 20 percent in Shriram Properties. The fund has invested in retail malls, office buildings, housing and hospitality. Though the real estate sector seems less attractive for investments because of the high interest rates and fall in sales, Goswami said India’s growth story will continue like this, which in turn will help the infrastructure and real estate sectors.

Foreign and domestic funds poured $6.8 billion in the real estate and infrastructure sector last year, compared with about $3.5 billion in the previous year. A booming housing sector and surging demand for commercial property has companies guzzling equity and sometimes even debt money provided by the funds.

Funds are likely to play a major role as bearishness surrounding the IPO market forces companies to seek private equity money. For increasing the India investments, the US-based parent company is thinking of floating a separate fund. “We are keen to invest in India owing to the consistent growth in real estate sector. At this point, it is logical to float an India-dedicated fund for investments. However, nothing has been finalised,” said Goswami. Real estate funds have poured money into several such projects.

The US-based global fund has received equity commitments of $3.5 billion from public and corporate pension funds, foreign institutions, insurance companies and banks, endowments and foundations, trusts and high net worth individuals. It has committed to invest in 162 deals in the global real estate, including the development and acquisition of office, hotel, retail, industrial, multi-family, for-sale residential, senior and student housing, and golf assets through both individual, portfolio and company-level transactions with a gross asset cost of $14 billion.
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