Farallon exits seven India projects

As the San Francisco-based firm continues to raise its first property fund in North America, it has exited of seven real estate projects in India for INR11.7 billion, although currency depreciation seems to have eaten into returns.

Farallon Capital Management has exited minority stakes in seven real estate projects in India to its domestic joint venture partner, according to a statement. Those exits generated a 1.4x equity multiple in rupee terms for the San Francisco-based private equity firm.

Farallon received INR11.7 billion (€138 million; $185 million) for its 49 percent stake in the seven projects. The firm had invested INR8.5 billion in the real estate projects between 2006 and 2008, the statement noted. Indiabulls Real Estate, Farallon’s joint venture partner and one of India’s largest real estate companies, will now own 100 percent of the projects.

Although the exact returns from the exits were not disclosed, Farallon’s equity multiple would be about 1.4x in rupee terms. However, the firm invests out of its US dollar-denominated funds, and the rupee has lost almost 50 percent of its value against the dollar over the last five years.

The returns for each of the seven projects also were not uniform, the statement showed. Farallon only received more money than what it originally put in for three of the projects. The remaining four showed either flat or slightly negative returns. The seven projects ranged from residential to commercial real estate, including one integrated township, and totaled 298 acres of development. Farallon did not respond to requests for comment by press time.

Although Farallon traditionally has been a private equity firm and has made real estate investments out of its private equity funds so far, the $20 billion powerhouse began raising a $400 million value-added real estate fund focused on North America this year, according to PERE’s Research & Analytics Division. Earlier this month, the firm held a first close on $153 million for that fund.