Real Estate Companies yield Better Returns to Private Equity firms making an exit

The time when the Indian real estate market is displaying some listlessness, to survive well in the situation many private equity firms have left their investments in the realty market and have locked them in hopes for better and higher returns.

According to a recent report by Brookfield Financial it is estimated that out of the total Provident Equity capital exploited until March 2014, only one fifth of that total amount which was nearly $6.9 billion was used by the Provident Equity Funds. It lies to the fact that the PE Funds are finding it difficult and are tucked up in a situation where in it is all the more tough to make a safer departure. As per the expert concern this exit will become a stronger trend and India will accelerate into the trend during the other half of the year and the next as well.

According to Mr. Sourav Goswami, the principle head of the Capital Market at The Red Fort Capital marked that the renewed interest in India plus an intended pressure over the existing stake holders to make a successful exit will result in huge numbers in terms of deals catering the secondary market. He also added that on the other hand, those residential projects which have ripened will definitely yield better cash flow thus, helping the investors to make a positive exit. He himself was successful in making multiple exits after investing $ 1 Billion.


In a session with Mr. Shobit Agarwal who is a managing director at Capital Markets at JLL India said: that the Indian prices are compared with other property markets despite the fact, of the exits coming through a buyback or a third party for that matter. He also lay emphasis on the detail that these funds have derived good returns from its investments or not.

The reasons that have restricted the realty private equity off shore funds is due to the following constraints accounting like the currency depreciation, construction delay, weak and low economic conditions and poor property sales etc. These low paced movements have also resulted in the investments being trapped earlier. But with time there has been an improvement in the current situation and this has rehabilitated the assurance and confidence helping to set more reliable targets which are much expectant in nature.

The Brookfield Financial has reported that around 58% exists have been witnessed by the residential sector where as 24% exit has been recorded in the office sector. The residential exit was due to the promoter buyback. The total investment deployed in the realty sector by the PE Funds accounts to around $ 37 Billion since the year 2005.

This PE interest has gained a hike and will see a pick up as the market scenario will improve in the next 2-3 quarters. Considering the March quarter the PE Funds more than doubled their investments in the realty sector clinging to the hopes of an improved economic scenario in the country. The first quarter of 2014 witnessed PE Funds invested around 2.800 Crore in the country’s realty sector and this figure showed an increase of around 2.3 times when compared in the bygone year. This data entirely lies as per the details by a property consultant firm named Cushman & Wakefield.

This article is published by Dreamz Infra Review

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