Real estate news on KKR invests Rs700 crore in three realty projects

Investors/ Investment proposal, New projects, Real Estate services, Delhi-Gurgaon, Bengaluru, Real Estate Service (RES), Parthenon, Nikoo Homes II, Crescent Park
Posted on Dec 30, 2015
KKR India Asset Finance Pvt. Ltd has invested about Rs.700 crore in three real estate projects in back-to-back transactions, making the December quarter its most robust deal-making period this year.

The local arm of private equity firm Kohlberg Kravis Roberts and Co. LP has invested Rs.200 crore in structured debt to SARE Homes group housing project in Gurgaon, about Rs.250 crore in a township project of Bhartiya City Developers Pvt. Ltd in Bengaluru and another Rs.250 crore in a luxury residential project called Parthenon in Andheri, a Mumbai suburb.

KKR India Asset Finance, a non-banking finance company (NBFC), was set up two years ago to focus on lending to residential projects in top cities. It inked its first transaction in June 2014 when it invested about Rs.350 crore in Mumbai-based Wadhwa Groups luxury homes project, The Address, in suburban Ghatkopar.

KKR has also had a successful run with its other Indian NBFC, KKR India Financial Services Pvt. Ltd, which was set up in 2009.

“In 2015, the deal flow was good though the risk was not less. KKR will continue to do structured debt transactions in 2016, and deal opportunities are expected to remain high,” said a person familiar with the development, who did not wish to be named.

KKR did not respond to an e-mail query.

KKRs Rs.250 crore investment in Bhartiya Citys project in Bengaluru is the second transaction between the two. In 2014, KKR did a Rs.410 crore structured transaction with the developer for the same project.

Confirming the deal, V.S. Mani, president, finance, Bhartiya City, said, “This time, the capital will be used for Nikoo Homes II, a new phase of the project. The project has been doing very well and sales have been good.”

SARE Homes project, Crescent Park, in Sector 92 of Gurgaon, is a large township, and the developer plans to use the capital raised from KKR for project development.

Earlier this year, the developer, part of London-based asset management firm Duet Group, launched Olympia, a 17-acre sports-oriented project within the Gurgaon township.

A SARE Homes spokesperson declined to comment on the transaction.

In 2015, SARE Homes also entered into an asset management and development partnership with IDFC Alternatives Ltd, the investment arm of IDFC Ltd. Under this arrangement, SARE Homes will manage and monitor the projects in which IDFC will invest; both parties may co-invest and develop certain projects on their own; and IDFC may also invest in certain existing projects of SARE.

Private equity funds have invested about $2.6 billion between January and November 2015, compared with $2.1 billion in 2014, according to VCCEdge, which tracks investments. NBFCs have been equally aggressive in lending at competitive rates to the sector, as demand for capital continues to be high.

“Structured debt transactions continue to dominate investments in real estate projects as developers demand for capital still remains high. We expect structured debt deals to occupy the bulk of deals in 2016 as well, even though selectively, we will see equity and structured equity deals making a comeback in real estate next year,” said Shouvik Purkayastha, executive director at property advisory Cushman and Wakefield India.

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