February 2008
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Realty, hospitality sectors catch PE firms` fancy

With IT projects taking a backseat on the investment front, private equity (PE) funds are cosying up to residential, commercial and hospitality spaces in south India. Pragnya, a Mauritius-based private equity fund focussed on the real estate market in India, has so far invested about $40 million in realty projects, including an integrated township project by L&T in south India, and expects its investments to reach $100-110 million this year. It is also planning to come out with a $150-million Pragnya Fund 2, which will invest in realty and hospitality projects, particularly in the South. In December 2007, Red Fort Capital, a global real estate private equity fund, announced a Rs 400-crore investment plan for Chennai's realty market over the next six months. It has acquired 10 acres of land for a large residential project in Chennai. The company has already invested Rs 1,200 crore on projects in Bangalore and Hyderabad. […]

Is the public primary market turmoil affecting the PE sector yet?

Is the public primary market turmoil affecting the PE sector yet? From the trend in February, it does appear to be so. With a week still left to go, fund raising from private markets has been fairly good. About $1.6 billion has been raised so far. If you annualise this, this is a run rate of over $20 billion, which is better than 2007. There’s not much impact in the number of deals either. Around 24 deals have been announced, which is nearly a deal a day. There were nearly 400 deals in 2007, a little over a deal a day. So, the current run rate is not too bad. What is discernible, maybe, is some impact on investments in listed equity by private investment in private equity (PIPE) deals. It appears only one PIPE deal has been announced so far. According to PE investors, while stock prices have come down, promoters are not yet willing to reconcile to them. PE investors will naturally not pay the price which was prevailing two months ago at this time. Take the case of a building material company, which was quoting around Rs 230 till two months ago. It wanted to do a PIPE deal at Rs 270 while the PE investors were not willing to go beyond Rs 250. The deal didn’t happen. Now, the company quotes well below Rs 200. Clearly, promoters may prefer to wait at this point. If the stock does not cross Rs 200 for, say, the next 3-4 months, then they may be forced to go for a lower price. […]

Realty co Eldeco eyes $250 mn PE investment

Delhi-based tier II realty player Eldeco Group is in discussions with AIG and Merrill Lynch for raising $200-250 million from a clutch of private equity (PE) investors. As part of the plan, Eldeco has already raised some funds from Xander PE. Sources said group company Eldeco Infrastructure & Properties (EIPL) was in the market for raising funds at the entity and special purpose vehicle (SPV) level for upcoming projects in Ludhiana and Jalandhar, in Punjab, and in two cities in Maharashtra. The company is also looking at raising funds through four SPVs and may be at the holding entity level as well. “We look at raising funds from time to time, but there is no need for us to comment on it,” said Eldeco CFO NK Ahuja. The company denied it was holding talks with the PE firms, and that it has raised funds from Xander. The move comes after the group’s earlier plans to merge the listed entity Eldeco Housing & Industries (EHIL) with EIPL and raise funds from the capital market was abandoned, sources said. Lucknow-based EHIL is a smaller group company compared to the privately-held EIPL, which has notched up 80% annualised growth since being incorporated in 2000. […]