NBFCs Will Take Exposure To Realty Projects For PE Firms

January 2, 2012 in Mumbai: falling sales once more credit risk, cost, and flexibility they PE firms rationales are elbowing out with.

Developers falling home sales and tight credit in the Bank as nonbanking financial companies (nbfcs) proceedings private equity (PE) firms in the real estate sector, a run for their money this year will give.

Many PE firms structured mezzanine loan deals in the past two or three years were 25-26 per cent rates., and they are down to 17-18 percent-the nbfcs and exit on top property consultants say now, would sell directly on loan deals nbfcs 18-22 per cent, with developers.

Jones Lang LaSalle consulting, there are at least six 20-odd years, only three lending nbfcs earlier than real estate in LIC housing finance, HDFC, DHFL. and there are new players, such as installing Kotak people are a number of such capital finance plc, Everstone capital Indostar Ashmore group and Goldman Sachs as established by the hand of PE; In addition, non-banking financial company Ajay Piramal Piramal capital group; N capital group, Xander, and Edelweiss floats in all real estate loans.

"Increasingly, nbfcs are they PE firms from buying debt paper and take risks for projects Realty direct loan deal. They think they can take on projects in charge and all due diligence" King, creed, Managing Director, real estate consultant in Paris, p.e huge infrastructure. And real-estate companies DLF nodules and Pune special economic zone between RS for Hubtown 810-million deal, he says pointing to large PE firms will pursue larger deals, while "playing a fast turnaround time, nbfcs-end use and flexibility in the size of the funds have come due.

On the other hand, advisors and fund managers in PE funds a significant reduction of their funding cycle is coming to an end as nearly 3 billion (RS crore in today's exchange rate at 15900) raised funds in 2006 and 2007, set in 2012. To exit, such as the Red Fort, HDFC, Kotak Indiareit and only a handful are raising new funds now, They point out.

PE investment real estate at $ 0.85 BN (4,526 at current exchange rate: RS crore) in 2011, as per JLL. it 6.7 bn in 2007 and 2008 to $ $ 3.3 bn. against this, nbfcs RS 3,000 crore in deals worth in the current year and is set to grow next year, says Amit Goenka, National DirectorThe capital transaction, UK based global property consultant Knight Frank.

Other reasons

"It's just a business and fall PE prematurely nbfcs real estate, will take over the business of PE firms is" says Goenka. "have made only a handful of players PE funds in real estate private equity."

In addition, a recent report on the way in real estate PE say their PE partners in JLL nbfcs way to provide for the support of the Indian real estate firms play a major role in the promoters.

"Although lending rates except moved. Flexibility and funds with more than 20 active nbfcs, they (nbfcs) principal, finance buybacks, "said in the report.

While the PE firms return expectations over 20 percent, said advisers like that are lending rates of 15-16 percent in 2010 from nbfcs to 18-22 per cent annually due to the increase in interest rates now.

Ramesh Jogani, Managing Director and Chief Executive Officer, Indiareit Fund advisors, Ajay Piramal Piramal healthcare of elevated agreed that a larger role in financing nbfcs real estate game.

"Land purchase loan repay Bank, nbfcs and construction finance. I think the nbfcs in private equity real estate financing businesses are taking over," he said.

Added: "you are the first to land developers, aggregation and so on were seeking to build hotels and large malls, most money should now build and much more land, the nbfcs are met".

Developers say that they fund the short-term crisis, home sales and quarterly nbfcs repayments falling due to high tide goals are.

"I think the only developers unable to raise funds or overleveraged to raise funds by nbfcs. Deepak Goradia, MD, friendship group, Mumbai's biggest developers, although costs are higher, they meet quarterly bank payments or land side, make some paid as they are opting for these funds," he said.

Nbfcs agree with officer. Previously, developers used to fund projects with customer advances. An Executive who did not want to be named, Indostar since sales are down, they are financed with lenders, "he said.

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