Real Estate Roundup: Global Biggies Eyeing Investments Worth $25 Billion
First, UAE's leading private real estate developer Dheeraj & East Coast LLC (DEC) has announced its plans to enter Indian real estate market. Its first project is scheduled to be launched in the first quarter of 2008. Dheeraj Group, the Indian partner in DEC, already has a few projects going in Indian cities including Mumbai. Dheeraj Wadhawan, Managing Director, DEC said, India figures prominently in DEC's expansion plans. Damac Properties, a Dubai-based property developer, is another Gulf based company planning real estate investments in India. In an interview to Bloomberg, Damac's Chairman Hussain Sajwani said the company has plans to invest as much as $5 billion in India over the next three years. Damac plans to build houses, offices and shops in Mumbai, New Delhi, Hyderabad and Bangalore. The first project will be started in 12 months. Dubai-based Emaar Properties is already present in India in joint venture partnership with Delhi-based MGF Group. Another large group from the region, Nakheel, has formed a $10 billion partnership with Delhi-based DLF. The Economic Times has a round up of major global real estate players looking at Indian property space. They include Dubai World, Trump Organisation of the US, Smart City of Dubai, Kishimoto Gordon Dalaya, Khuyool Investments, Bonyan Holding, Plus Properties, ABG Group and Al Fara's Properties. All of them could bring in a total of $20-25 billion in the next 12-18 months to the sector.

DLF Raises $424 Million From Merrill Lynch, Brahma Investments
India's largest real estate firm DLF Ltd has sold stakes in a eight middle-income residential projects to private equity investors for $424 million, DLF said in a statement to BSE today. The Delhi-based company sold 49 percent in seven housing projects to Merrill Lynch Rs 1,481 crore or $377 million. The seven housing projects in which the Merrill Lynch has invested are in the cities of Chennai, Bangalore, Kochi and Indore. It has also sold a 49 percent stake in another middle-income Panchkula, Haryana, housing project to Brahma Investments for Rs 194 crore. These projects will get fully developed in about seven to eight years, DLF said. T C Goyal, MD, of the Company, said, "As a part of its strategic objective, DLF continues to remain focused on keeping its net economic interest in homes business to a ten year development horizon. Accordingly, these two transactions shall help DLF unlock its investments in land resource for the eight projects and also help in increasing rate of return to DLF shareholders. Besides resulting in positive NAV accretion for DLF, the transactions would provide good returns for the PE investor.

Knight Frank To Launch $250 Million Real Estate Fund
This could be the first real estate fund by a property consultancy in India. The UK-headquartered Knight Frank Group plans to launch a $250 million India-focused real estate fund, reports Business Standard. It will be an offshore fund, and will raise a minimum of $0.5 million or above from high networth individuals. Rutley Capital Partners (RCP), Knight Frank’s real estate private equity and investment management arm, is expected to spearhead the launch of the India fund. RCP has two property funds, Rutley European Property Fund, a Europe-focused fund and Rutley Russia Property Fund. Knight Frank also has an Africa-focused fund. India will be the fourth fund. Knight Frank India Executive Director Keku Cola is may head the new fund.

Dubai-based Baer Capital Plans $500M-Infra And Real Estate Fund
Baer Capital Partners, the Dubai-based India focused private equity fund, plans to raise $500 million to invest in real estate and infrastructure in India, Bloomberg reports, quoting a senior official of the firm. Baer will begin investing from this fund in the second quarter of next year, Alok Sama, president of Baer Capital told Bloomberg. Baer Capital will join others like JPMorgan Chase & Co., 3i Group, ICICI Bank, Blackstone Group and Citigroup Inc, and the Tatas who are betting big on infrastructure funding. Sama and Brij Raj Singh, a former managing director at Merrill Lynch & Co, are the founders of Baer Capital along with Michael Baer, a former board member of Swiss private bank Julius Baer Holding AG. Baer already runs Beacon India Private Equity Fund, which has a corpus of $200 million. This fund is founded and managed by Deepak I Shahdadpuri (based out of Mumbai) and Rajiv Thakur (Delhi). They recently invested Rs 75 crore in Delhi-based A2Z Engineering. Baer is also planning a $250 million India focused hedge fund.

Trikona Capital To Raise Rs 1,500 Crore Domestic Real Estate Fund
Trikona Capital, a New York-head quartered Indian real estate investment firm, plans to raise a Rs 1,500 crore (about $375 million) domestic fund, reports Mint. The paper reports, quoting Trikona’s co-founder and managing director Ashish Kalra, that the fund would be “by-invitation-only” and would have a minimum ticket size of Rs 25 crore. It’s expected to be launched in December, and will invest in residential and commercial properties. Trikona’s proposed fund will be bigger than Kotak Realty’s recently closed domestic realty fund which has a corpus of Rs 1,200 crore. Meanwhile, Trikona also said that it plans to launch a $1 billion infrastructure fund. The target is to invest $10 billion in Indian real estate sector over the next 10 years. Trikona raised its first fund of £250 million (Rs 2,032.5 crore) called Trinity Plc from London Stock Exchange’s Alternative Investment Market.

HSBC To Invest $1.1 Billion In India In Private Equity And Real Esate
How much money does UK-headquartered HSBC plan to invest in India? It could be about $600 million for private equity and another $500 million for real estate investments, totaling $1.1 billion. HSBC India recently raised a $500 million realty fund. The bank’s Asia PE Fund had raised $1.5 billion, of which 40 per cent will flow into India, Business Standard reports, quoting bank’s officials. However, the details are not clear nor does the HSBC website is updated about the developments. This could be separate from HSBC Technology Fund Limited (HTF), which was raised in January 2001 at $53 million (currently in the process of realising its remaining investments), and the $120 million HSBC Asian Ventures Fund 2 Ltd (HAV2), which makes $3 million to $10 million in mid-sized, growth-oriented technology companies.

Clearwater Capital Partners Invests In BSEL-Led Real Estate Project
In another real estate deal announced today, New York-based private equity firm Clearwater Capital Partners has acquired a 49 per cent stake in a special purpose vehicle firm formed by BSEL Infrastructure in an equal joint venture with Unity Realty and Kamat Hotels. The financial terms are not disclosed. The SPV was an equal JV between BSEL Infrastructure, Unity Realty and Developers and Kamat Hotels holding 33.33 per cent each. Post Clearwater acquisition, the stake of the three Indian promoters have come to down to 17 per cent each. The company further said the JV has been awarded a project for constructing a 400-room hotel in Pune.

Eredene Capital, Apeejay Surrendra Team Up for Logistics Park In Haldia
UK-listed Indian developer Eredene Capital is investing up to £5.25 million ($10.91 million) for a 50 per cent stake in a joint venture to develop a 72-acre integrated logistics park near the Haldia port in West Bengal. Eredene has partnered with Kolkata-based Apeejay Surrendra to develop the land. The cost of the project is about £24 million ($49.9 million). Eredene’s investment in the project will be phased, with £3.5 million ($7.28 million) expected to be committed by the end of January 2008 and the balance during the course of the year. Construction of the project is expected to start in 2008, and the first revenues are expected to kick in 2009. The logistics park site is about seven km from the Port of Haldia and around 140 km from Kolkata. Haldia has a port, a large-scale petrochemicals centre with an oil refinery, fertiliser facilities, manufacturing plants and various light industries. It will be developed to provide distribution, warehousing and transport services as well as ancillary facilities such as commercial offices, hotels, shopping malls, and light processing workshops. The Haldia logistics park is the Eredene Group’s fourth investment since it announced a broadened investment strategy in June 2007. The Eredene Group has now committed a total of £25.6 million ($53.28 million) in real estate projects in India, 46 per cent of the £55.4 million ($115.3 million) of net funds it raised in 2006. Eredene, which is listed in Alternative Investment Market of London Stock Exchange, has a six member team in India headed by Nikhil Naik, who was till 2006 head of P&O Ports India. Eredene’s Past Investments This deal is Eredene’s fourth in three months. Eredene’s first investment was of up to £16.4 million ($34.13 million) in Matheran Realty Pvt Ltd, a company developing around 185,000 low-income residential units on the outskirts of Mumbai. They are using cheap and fast construction methods for this project which includes pre-fabricated fibre cement boards. Its second project was an £850,000 ($1.76 million) investment in a 28-acre Container Freight Station (CFS) project in Tamil Nadu where it has a 49 per cent stake. Eredene’s third investment was £3 million ($6.24 million) for a 40 per cent stake in a 32-acre CFS project in the south of Gujarat (a special purpose vehicle which is developing the first dedicated CFS at Pipavav port).

Leela Group Set To Get $1.25 Billion Funding From US Fund, Probably Blackstone
US buyout fund Blackstone is reportedly eyeing a major stake in The Leela Group, a leading hospitality chain in India. The Times of India reports that a major US fund is planning to invest about $1.25 billion (Rs 5,000 crore) in the Leela Group. The fund is most likely to be Blackstone, the report said. Chairman of the Leela Group, Capt C P Krishnan Nair, has confirmed the plans to seek investment. “We have got close to Rs 5,000 crore worth of funding, which will be spent on our ongoing projects and for expansion purposes.” He did not divulge the names of the investors. Leela has four properties across the country (Mumbai, Bangalore, Goa and Kovalam) and is adding six more (Gurgaon/Delhi, Chennai, Hyderabad, Pune, Udaipur and Jaipur). The company had spent some Rs 600 crore recently to acquire about three acres of land in Gurgaon. The hotel will be built at a cost of Rs 900 crore, which will be the company’s largest spend on a single property. The company also have plans to launch a second chain of 5-star luxury hotels called Leela Gardens, which would come up in religious/devotional cities like Mysore, Mookambika, Haridwar and Viashnodevi, TOI reports, quoting Capt Nair.

Walton Street To Invest $100M In Shriram Properties; To Buy Land In Pune, Gurgaon
Shriram Properties, a part of the Chennai based Shriram Group, has raised $100 million from US-based real estate private equity fund Walton Street Capital. Walton will invest at the enterprise level and also in one of the special purpose vehicles owned by the company. According to The Economic Times, the deal values Shriram Properties at Rs 1,800 crore. Walton will picking up about 15-20 per cent stake. According to M Murali, managing director, Shriram Properties, the money will be utilised to buy land in Gurgaon and Pune. The funds are to be invested in less than one year, says a report in Business Standard. This is the second investment of Walton in a Shriram venture. The firm had earlier announced a $1.25 billion investment along with Starwood Capital in Shriram Properties promoted township project in Kolkata. They will develop a 20m sq ft property in an erstwhile Hindustan Motors plant in Uttaraparah, Howrah, near Kolkata. They will have residential, retail and commercial structures. Walton manages assets worth $14 billion. Although the Shriram group is based in Chennai, the property business is headquartered in Bangalore.

Shapoorji Pallonji In Talks With PE Firms To Sell Stake In SEZ Projects
Private equity firms are looking to buy a stake in Indian construction giant Shapoorji Pallonji & Co. Ltd. The firm is developing four special economic zones in Pune, Mysore, Nagpur and Kolkata. They will be focused on the information technology and back-office businesses. The company may dilute 10 per cent to the PE firms, reports Mint. The paper quotes a company official as saying that they are “talking to a lot of private equity firms, including (the private equity arms of) Goldman Sachs and Deutsche Bank”. A deal is, however, yet to be sealed. The others who are talking to the company include the Singapore government-owned investment management firm GIC and India’s own HDFC Realty. Apparently, the company’s SEZ projects have been valued at about $1.5 billion by KPMG and investment bank JP Morgan. The company may also consider listing them as a real estate investment trust.

Goldman Sachs Probably Interested In Sabeer Bhatia’s Nano City Project
Hotmail fame Sabeer Bhatia is talking big money again. According to The Economic Times, Goldman Sachs is probably looking at acquiring a 33 per cent stake in Bhatia’s Nano City project in Haryana (near Panchkula, as a reader points out). That may translate to about $125-150 million. However, it may be too early to say if there is a deal. The paper quotes a Haryana government official as saying that “there have been initial talks between Mr Bhatia and Goldman Sachs”. Bhatia, who made a fortune of over $400 million by selling Hotmail to Microsoft in the late 1990s, is building a nano city over 11,000 acres in Haryana. Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) holds 10 per cent stake in while the remaining stake is held by Bhatia’s Nanoworks Developers. ET further says only Bhatia may dilute stake, while HSIIDC’s will remain intact. That’s however the version of the government official. The project will require an investment of Rs 1,850 crore, of this over Rs 800 crore will go towards buying the land.

Bahrain’s Gulf Finance House Raises $630M For Energy City India
Gulf investors has committed $630 million for Energy City India, an infrastructure project to be set up in Maharashtra. Bahrain-based Gulf Finance House (GFH) has raised the capital from its clients for the proposed business hub for oil and gas industry. The project built over 300 acres in Navi Mumbai will house companies in the entire oil and gas value chain. The response from investors to the project was encouraging. The issue was oversubscribed 60 per cent more than what Gulf Finance was looking to raise for the project, reports Arabian Business. Gulf Finance has offered investors a total of 75 per cent return over three years (see DNA for more details on the project). GFH has a similar energy city project in Gulf state Qatar, and is planning more in the region.

Kotak Buys 10% In Sunteck; Ishaan Invests $272.5M In K Raheja Projects
Kotak Realty Fund will invest Rs 140 crore ($35.2 million) for 10 per cent stake in Bombay Stock Exchange listed Sunteck Realty. The investment would be through a combination of equity and convertible preference shares, which, on conversion will result in a 10 per cent stake in the company, reports The Hindu. The group plans to use the capital to develop residential and commercial projects in Mumbai, Goa, Pune, Nagpur, Chennai and other key Tier-II cities. It’s currently developing a premium residential project - Signature Island - in Mumbai at Bandra-Kurla complex. Kotak Realty Fund, which manages a new $400-million fund, had last month acquired 11.11 per cent in Pride Hotels chain. London-AIM listed real estate fund Ishaan Real Estate has acquired 40 per cent stake in eight real estate projects promoted by K Raheja Group. The deal is valued at Rs 1082 crore ($272.5 million) or £133 million. The projects include three IT parks (, two Inorbit shopping malls, and one hotel property. Ishaan projects include Inorbit shopping mall, Hyderabad; Inorbit shopping mall and IT park, Pune; Mindspace IT Park (SEZ development), Pocharam, Hyderabad; Mindspace IT park (SEZ development), Navi Mumbai; Mindspace IT park (SEZ development), Cyberabad; Mindspace IT park (Non-SEZ development), Cyberabad; Commerzone IT park, hotel and retail development, Bangalore; Vivarea, residential development, Mumbai. The eight Projects have an aggregate planned built up area of 15.3 million square feet. In November last year, Ishaan raised £180 million from London Stock Exchange’s AIM exclusively to invest in K Raheja’s projects. (Via Release and The Economic Times)