Canada-based PE fund SITQ, which had plans to invest up to $1.6 billion in the Indian real estate sector, is shutting down its operations in the country. The fund has not been able to identify deals in the ‘right value’, said a person with direct knowledge of the development. SITQ, which is a part of Canadian business group Caisse de depot et placement du Quebec, merged with Ivanhoe Cambridge, another PE fund of the group, in July this year. The fund manages a portfolio of $30 billion across 24 countries. Its assets include office buildings, business parks, hotels, apartments and retirement homes in cities across Canada, US, France, UK and Germany.
It entered the Indian market in 2007, with a focus on the real estate sector. A year later, the impact of global recession was being felt in local markets leading to a lull in corporate activity and a drop in deal flow right up to 2010. “We did not find the right formula to make direct investments in India and direct investments take time to achieve,” said a company spokesperson over an email response. “As we are always on the lookout to increase our global presence especially in high growth markets such as India, we will keep monitoring the situation and may re-evaluate our position over time.”
SITQ planned to make direct investments in India, and appointed Aditya Bhargava as managing director to devise strategy and scout for investment opportunities. So far, its investments in the country have primarily been routed through the ‘fund of funds’ route, a situation where PE firms invest in other funds that in turn invest in companies. SITQ, which has so far invested in funds of other real estate funds dedicated for the Indian market, plans to continue its investments through the indirect route.
“It is a challenge for the overseas real estate firms to invest in Indian realty firms. Besides the regulatory issue, there is hardly any exit route due to poor capital market and non-availability of the real estate investment trust,” said Yogesh Kapur of Enam Securities. PE funds primarily invest in residential projects, which are self-liquidating at completion.
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