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KKR inks first India RE deal with StanChart

The private equity firm and the bank have agreed to make a combined INR7.5 billion loan to Indian developer Wadhwa Group for one of its residential projects.

New York-based private equity giant Kohlberg Kravis Roberts (KKR) has inked its first property deal in India alongside Standard Chartered Bank, jointly providing a INR7.5 billion (€92 million; $125 million) loan to Mumbai-based developer Wadhwa Group for a residential project.

The new loan will be used partly to repay Wadhwa’s existing debt, including one INR 3.3 billion loan from Indiabulls Financial Services, and partly for a high-end residential apartment project in Ghatkopar outside of Mumbai. The 2.4 million square foot project, called The Address, is reported to be more than halfway pre-sold already.

The life on this loan is approximately four years. The exact terms on the loan were not made public, but typical interest rates for development loans in India can be as high as 24 percent. PERE understands that the rate on this loan is lower, however, as the development is already well advanced. The first apartment handovers should happen in the next two months.

This would represent KKR’s first real estate investment in India since setting up a real estate arm in the country last year. It is understood that KKR is putting up INR3.5 billion of the loan from its INR20 billion India Alternative Credit Opportunities Fund I, while Standard Chartered is providing the remaining INR4 billion.

In mid-2013, KKR’s newly-formed real estate arm made its first hire in India, bringing Ashish Khandelia on board as a director from Morgan Stanley Real Estate. Earlier this year, the firm also added Saurabh Gupta to the regional team from SUN-AREA Property Partners. The arm of the firm responsible for the loan, KKR India Asset Finance, is registered as a non-banking finance company (NBFC), doing primarily debt and debt-equity deals with developers.

Both parties declined to comment on the deal when approached.

Sentiment in India’s property market has generally improved since the election of Prime Minister Narendra Modi. Since coming to office in May, he has announced several favorable policies for foreign direct investment and the formation of real estate investment trusts (REITs) in the country. In anticipation of the market upswing, several large investors – including Dutch and Canadian pensions APG and Canada Pension Plan Investment Board – have formed significant joint ventures in the country.