As much as $4 billion of institutional capital is currently sitting on the side lines of India’s private real estate investment market and is seeking to form partnerships with local operators, participants heard at PERE’s India roundtable conversation, published this week.
Senior executives from Hines, Piramal Fund Management and Indiabulls Asset Management heard from Nitin Gupta, a managing director at Macquarie Capital India, part of the capital advisory division of Sydney-based investment bank Macquarie, how between eight and 10 institutional investors were actively scouring the Indian market with a view to making sizeable equity commitments.
He told attendees at the two-hour event, held last month behind closed doors, how his firm had tracked approximately $4 billion of equity being invested in India in the last three years. He said: “I think a similar amount of capital can come in and get committed in the next two to three years in India.”
Only this week, GIC Private, the sovereign wealth fund of Singapore, inked the latest in a series of recent transactions in India, committing seed capital to Jain Housing and Construction, a residential developer with projects near Chennai, with a view to committing more in the future, according to India’s Business Standard newspaper.
The investment was latest in a string of commitments by the sovereign wealth fund to India’s private property sector since the election of Narendra Modi as Prime Minister last year. GIC also partnered with New York private equity firm Kohlberg Kravis Roberts, Gurgaon-based developer Vatika Group and Bangalore-based developer Brigade Group also since the election in May.
Other large institutional investors to have formed meaningful partnerships for private property investments in India over the last couple of years include APG Asset Management, the Dutch pension manager, Abu Dhabi Investment Authority, the United Arab Emirates sovereign wealth fund, and Canada Pension Plan Investment Board, the Canadian pension manager.
The renewed support by the world’s largest institutional investors for Indian property follows something of a post-global financial crisis hiatus which saw a fraction of the capital raised and deployed before the crisis remain active.
Indeed, according to Venture Intelligence (VI), the India-focused private company data and analysis firm, there have been 743 announced private equity real estate investments valued at $26.9 billion since foreign direct investment was permitted by the Indian government in 2005.
But with few exits materializing from this first wave, investors had been reluctant to recommit until recently. VI reported that 64 investments were closed via such capital in 2014 with an aggregate value of more than $2 billion. But while that total is 76 percent lower than the market’s transactional zenith in 2007 when $8.6 billion of property investment was made, it was nonetheless 14 percent higher than in 2013 when 56 deals valued at $1.85 billion were recorded.
The India roundtable was published this month inside PERE's India Report 2015.