MUMBAI: US private equity firm Kohlberg Kravis Roberts & Co has made its entry in the country’s real estate sector by finalising investments of Rs 750 crore in two property projects. KKR has struck a structured debt transaction for Rs 400 crore for the Bhartiya Group’s integrated township project in Bangalore, two people with direct knowledge of the transactions said.
It also agreed to provide a Rs 350 crore structured loan to the Wadhwa Group’s luxury home project in west central Mumbai, they said. The group will use the money to repay other lenders of the project, where the cost of apartments ranges from Rs 1.5 crore to Rs 10 crore. The Bhartiya Group plans to invest Rs 10,000 crore in the township project, which includes houses in various formats, an IT zone and a shopping district. The project, which will come up on 125 acres of land in north Bangalore, will be developed over 7-10 years. “These two investments represent KKR’s commitment to participate in India’s long-term growth story for the sector. The idea is to do investments in a calibrated manner with high quality partners,” one of the people said.
KKR declined to comment. The Bhartiya Group and the Wadhwa Group did not respond to e-mailed queries seeking comment.
KKR’s investments come when rival Blackstone Group has emerged as the secondlargest owner of office space in India. In the past two years, Blackstone has invested about $700 million, amassing a total of 24 million square feet of office space, behind DLF’s 27 million square feet. Blackstone controls about 20 million square feet of office space with joint venture partner and commercial space developer Embassy Group.
India is likely to witness an infrastructure boom, providing real estate with an advantageous edge as an investment vehicle, multinational property consultant firm Jones Lang LaSalle said in a research report.
“Investments, including FDI in the real estate sector, are bound to give high yields provided the projects are timely and properly executed,” said Rajesh Narain Gupta, Managing Partner at SNG & Partners, a law firm with practices in areas including real estate. KKR is gearing up to focus on real estate. Last year, it hired Ashish Khandelia from Morgan Stanley to spearhead its real estate initiatives.
Khandelia assembled a team that includes Saurabh Gupta, who was previously with SUN-AREA Property Partners. KKR and GIC, Singapore’s sovereign wealth fund, have set up an NBFC to invest in real estate projects in India.
GIC had committed an investment of $150 million in the NBFC.
The focus on the Indian real estate market comes after KKR’s broader plan to move beyond leveraged buyouts worldwide. Ralph Rosenberg, a real estate industry veteran who was previously a partner at Goldman Sachs Group, joined KKR in 2011 as the global head of its real estate platform. The PE major raised $1.5 billion in real estate funds for the western markets last year.