Aditya Birla Retail, the newest kid on the retail block, is weighing options to float a real estate fund, in line with the trend where retailers are looking at it as a mode of raising funds to cater to the ever-increasing demand and cost of prime real estate.
The move is likely to give a fillip to the already booming realty funds business in the country. “To address specific funding requirements and we may look at setting up a fund to acquire real estate assets which is one of the major concern areas for any retail player,” said Sumant Sinha, CEO designate, Aditya Birla Retail.
Recently, the Tata Group promoted Trent Ltd has entered into an agreement with private equity firm The Xander Group Inc to set up an institutional retail real estate fund in partnership with Indian developers. Kishore Biyani promoted Pantaloon Retail's Kshitij Real Estate Fund, is another example of a retail player setting up a fund to facilitate faster real estate development for the retail business.
Earlier in January, the AV Birla Group had bought out the majority stake in southern retail chain Trinethra Super Retail. The start-up venture of the Rs 40,000 crore Aditya Birla Group will tap a range of financing options to fund its growth, which include roping in private equity players as well. Outlining a broad strategy, Sinha said that the venture is currently banking on promoter’s equity. The venture will adopt a very different approach towards raising funds from what is done by the existing line of businesses within the group. It will look at tapping the debt markets after this, and then look at private equity players.
Currently, the realty fund market is sizzling with global biggies. Among the international realty funding agencies, which are scouting for projects in India are JP Morgan, Sun Apollo, Citigroup, Blackstone, Starwood, Trikona Capital etc. But, according to sources, with a fund of $360 million, JP Morgan has invested only 10% of this in India. Sun Apollo with a fund of $630 million has also invested only 10% in India as of now. From April 2006 onwards, Trikona Capital has announced over 10 deals across geographies (India), partners and asset classes.
Source : Financial Express