Dhruva Jyoti Chowdhury, Kolkata, India
Sensing the tempting Real estate market in India, the giants of almost every other India sector are preparing to cash on the Realty sector in India. The giants that have emerged as top global companies for specializing in some or the other respective fields are now turning their head towards the booming real estate in the country.
Bullish on government’s commitment in infrastructure development, global giant General Electric (GE) has recently elaborated its plans to set up a $300-500 million infrastructure fund for the Real Estate sector.
GE’s statement came after Citigroup, Blackstone, IDFC and IIFCL announced their respective plans to set up $5 billion fund for infrastructure development.
Reports also suggests that the company is looking at financing real estate and is planning a $2 billion fund to be invested across all types of real estate - residential, retail, townships and special economic zones (SEZ) I India in particular.
The Hinduja Group India, plans to develop 4,000 acres of land held by its listed units for residential and commercial use, under a company called Asia Property Development Ltd, joining a slew of business houses looking to cash in on a real-estate boom in the country. It’s also in close door talks with the private equity players interested in partnering the group in this venture.
The Hindujas’ land bank would count among the some of the bigger ones held by Indian firms. For instance, Delhi-based real-estate firms DLF Ltd and Unitech Ltd have land banks of 10,255 acres and 10,900 acres, respectively. Others such as Sobha Developers have reserves of 2,747 acres of land.
With real-estate prices rising 200% in India’s tier 1, cities in the past two years, Indian business groups such as chemicals firm DCM Shriram Consolidated Ltd and the Wadia Group, which owns the Bombay Dyeing clothing company, have forayed into real-estate development, although on a smaller scale. Both intend to develop around 100 acres each.
Gurgaon based real estate company Emaar MGF is learnt to be finalising its plans to hit the capital markets by the end of this year. The company is planning to raise $1.1 billion by offering 15-20% of its equity to public, valuing the company at about $6.5 billion.
This will be the second big IPO in the real estate sector to hit the capital markets this year. Another Gurgaon-based real estate company, DLF is planning to hit the capital markets with a $2 billion issue.
Mumbai-based Larsen & Toubro Ltd is also planning to invest Rs 8,000 crore in real estate and urban infrastructure over a period of three to five years through its subsidiary L&T Infrastructure Development Project Ltd (L&T-IDPL). HDFC has a 25% stake in L&T-IDPL, and would also be contributing to the investment.
L&T has already invested over Rs 700 crore in real estate and urban infrastructure projects. The management has recently agreed to invest an additional over Rs 500 crore in the business this year. The urban projects are executed through yet another subsidiary of IDPL, L&T Urban Infrastructure. The various projects together are expected to yield around Rs 2,500 crore annually for L&T. The projects will be implemented in a phased manner, with each under different special purpose vehicles (SPV’s).
L&T is developing residential projects in Chennai, Vishakapatnam and Colombo, apart from developing an integrated township in Chandigarh in association with a local builders. They have recently acquired land in Nagpur in order to develop a residential project. L&T IDPL is also working with Bombay Dyeing on redeveloping a dilapidated building in Mumbai.
Godrej Properties, the real estate arm of the Rs 7,500-crore Godrej group, is in deliberations with private equity investors to raise Rs 200 crore for its two realty projects in Hyderabad and Kolkata. The company is looking to dilute 49% stake in both the projects to PE investors.
The two projects may be set up as a special purpose vehicle in which the majority stake will be retained by Godrej Properties. Advance stages of discussions are continuing with two funds including the London-based real estate fund Trikona Capital.
Outsourcing and technology giants ‘Xansa’ has also entered into an agreement with Alpha Tiger Property Trust Ltd for sale and leaseback of the company’s real estate interests in India for Rs190.87 crore.
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