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PE Players Show Exit Route to Developers
| June 27, 2009 |  (1 votes, average: 5 out of 5) Loading ... |
Several private equity (PE) players, global and domestic, whose lock-in period in real estate investments are to end soon, are pressurising developers for an exit route. While some PE players are asking developers to go for an IPO at an SPV or a portfolio level, developers who are wary about going public are approaching other investors or even buying back stakes themselves.
Biren Parekh, Partner, (Real Estate), Ernst & Young, said, “Some developers delayed projects to get higher valuations in the booming market. Many PE players, especially at an SPV level, now want to exit and are asking developers for an exit route.” A fund manager with a US-based PE fund agreed, “While some developers delayed projects, time has been running out for us. Some clauses that formed the agreement allow us to persuade developers and ask them to give the returns agreed upon.”
India’s real estate sector witnessed fund inflows of more than $16.5 billion from PE players since 2007. While 2007 witnessed 86 real estate deals, this number stood at 78 in 2008 and just six this year. Kaustuv Roy, executive director, Cushman & Wakefield, said, “Some developers are negotiating with PE players as the former are wary of going public. The IPO would be a big risk. But PE players have their limitations and thus one may see some activity in the sector soon.”
There is talk that a Mumbai-based real estate player is looking to go public due to a serious fund crunch. Another New Delhi-based budget hotel chain, which invested heavily in building its property and had sold stakes to some leading private equity players, is also under pressure to go public.“A number of PE players are driving a lot of strategic and operational initiatives within their investee companies. They are reworking debt, relooking at marketing strategies and day-to-day management,” said industry tracker Anckur Srivasttava. In another development, a large unlisted real estate firm, which is present in south and central Mumbai, has decided to return the funds invested by a PE player.
News Published Under: Real Estate Developers |
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