- Unlike earlier, 2020-21 saw PE investors focus on portfolio deals across multiple cities and assets, rather than on specific projects or cities. Such portfolio deals constituted 73% of the overall share, with around $4,583 million invested via this route
Bengaluru: Private equity (PE) investments in the real estate sector grew in 2020-21 despite the covid-led disruption, with a focus on large portfolio deals across cities and asset classes.
Over $6.27 billion was pumped into the sector in FY21, a 19% jump compared to $5.8 billion in FY20, according to Anarock Capital’s ‘Flux – FY20-21 Market Monitor for Capital Flows’.
Unlike earlier, 2020-21 saw PE investors focus on portfolio deals across multiple cities and assets, rather than on specific projects or cities. Such portfolio deals constituted 73% of the overall share, with around $4,583 million invested via this route.
The average size of deals rose by 62% from $110 million in FY20 to $178 million in FY21. Both structured debt and equity witnessed strong growth during the year at 84% and 15% respectively. Structured debt was largely towards portfolio deals instead of project-level assets.
“Foreign funds are evidently very upbeat about India. High-grade rental-generating assets have attracted foreign investors in a big way during the year. Moreover, India has a strong underlying demand for office space with quality workforce and average rentals available at less than a dollar per sq ft per month,” said Shobhit Agarwal, MD and CEO, Anarock Capital.
Foreign PE funds showed significant optimism with nearly 93% of the total investments pumped into estate by overseas investors. Investments by foreign PE funds almost doubled from $3 billion (in FY20) to $5.8 billion in FY21. In contrast, domestic PE funds invested merely $300 million compared to $420 million in FY20.
“Alongside, the successful REIT listings have provided a good monetising option for PE investors, leading to a stronger demand for good quality rental earning office and retail assets,” Agarwal said. “During the year, PE funds like Blackstone and Brookfield have added a lot of assets to their existing portfolios, while others have takeover loan portfolios of NBFCs.”
The top deal last year was the part-sale of Bengaluru-based RMZ Corp. portfolio to Brookfield Asset Management for $2 billion.
This week, RMZ said it has formed a joint venture with Canada Pension Plan Investment Board (CPP Investments) where the latter will invest $210 million in three of its office projects in Hyderabad and Chennai.
https://www.livemint.com/news/india/pe-deals-in-real-estate-rise-in-2020-21-anarock-11618458518250.html
