US based Walton Street Capital to invest Rs 1,000 crore in Indian realty
16 Feb, 2008, 0048 hrs IST,Nevin John, TNN, Source Economic Times of India.
MUMBAI: The US-based hospitality and real estate fund Walton Street Capital (WSC) has decided to invest Rs 1,000 crore in the booming Indian real estate market in 2008. It has already tied up with property developers for investing Rs 600 crore at the project level. These investments will be made in special purpose vehicles (SPV) floated specially to implement projects. The fund is in talks with three Indian developers for the remaining investments, which is expected in a couple of months, said WSC managing director Sourav Goswami. Last year, the $13 billion Chicago-based WSC invested about Rs 800 crore in several SPVs, including 20% in Shriram Properties. The fund has invested in retail malls, office buildings, housing and hospitality. Though the real estate sector seems less attractive for investments because of the high interest rates and fall in sales, Mr Goswami said India’s growth story will continue like this, which in turn will help the infrastructure and real estate sectors. Foreign and domestic funds poured $6.8 billion in the real estate and infrastructure sector last year, compared with about $3.5 billion in the previous year. A booming housing sector and surging demand for commercial property has companies guzzling equity and sometimes even debt money provided by the funds. Funds are likely to play a major role as bearishness surrounding the IPO market forces companies to seek private equity money. For increasing the India investments, the US-based parent company is thinking of floating a separate fund. “We are keen to invest in India owing to the consistent growth in real estate sector. At this point, it is logical to float an India-dedicated fund for investments. However, nothing has been finalised,” said Mr Goswami. Real estate funds have poured money into several such projects. The US-based global fund has received equity commitments of $3.5 billion from public and corporate pension funds, foreign institutions, insurance companies and banks, endowments and foundations, trusts and high net worth individuals. It has committed to invest in 162 deals in the global real estate, including the development and acquisition of office, hotel, retail, industrial, multi-family, for-sale residential, senior and student housing, and golf assets.through both individual, portfolio and company-level transactions with a gross asset cost of $14 billion. “The US subprime crisis has affected fund raising from the US and Europe. But it is not a long-term problem. Generally, when we underwrite a transaction, we include the cost of hedging and potential currency leakage. Thus currency fluctuations has never been a serious issue for Walton. India is a growing economy, so there is no question of steep fall in real estate prices. The Indian developers are more open to partnering with private equity investors on reasonable terms,” said Mr Goswami. The year 2007 was the banner year for Indian real estate with estimates of over $5 billion of foreign funds flowing into projects. Another theme for the year was public offerings. With DLF listing, which energised the market, several developers proceeded to go public in India, creating a robust market for retail investors, said industry analysts. “ The picture has never been murkier in 2008. With fears of a looming US recession putting the brakes on global growth and its resultant liquidity, a choppy market seems to be ahead. For fund managers, some will view the turbulence as an indication to restrain investing in historically volatile emerging markets. Others will view it as an opportunity to deploy equity into Indian markets which is still buoyant,” said Mr Goswami.WSC, in joint venture with Shriram Properties and Starwood Capital Group, is developing a Rs 5,000 crore integrated township in Kolkata.
MUMBAI: The US-based hospitality and real estate fund Walton Street Capital (WSC) has decided to invest Rs 1,000 crore in the booming Indian real estate market in 2008. It has already tied up with property developers for investing Rs 600 crore at the project level. These investments will be made in special purpose vehicles (SPV) floated specially to implement projects. The fund is in talks with three Indian developers for the remaining investments, which is expected in a couple of months, said WSC managing director Sourav Goswami. Last year, the $13 billion Chicago-based WSC invested about Rs 800 crore in several SPVs, including 20% in Shriram Properties. The fund has invested in retail malls, office buildings, housing and hospitality. Though the real estate sector seems less attractive for investments because of the high interest rates and fall in sales, Mr Goswami said India’s growth story will continue like this, which in turn will help the infrastructure and real estate sectors. Foreign and domestic funds poured $6.8 billion in the real estate and infrastructure sector last year, compared with about $3.5 billion in the previous year. A booming housing sector and surging demand for commercial property has companies guzzling equity and sometimes even debt money provided by the funds. Funds are likely to play a major role as bearishness surrounding the IPO market forces companies to seek private equity money. For increasing the India investments, the US-based parent company is thinking of floating a separate fund. “We are keen to invest in India owing to the consistent growth in real estate sector. At this point, it is logical to float an India-dedicated fund for investments. However, nothing has been finalised,” said Mr Goswami. Real estate funds have poured money into several such projects. The US-based global fund has received equity commitments of $3.5 billion from public and corporate pension funds, foreign institutions, insurance companies and banks, endowments and foundations, trusts and high net worth individuals. It has committed to invest in 162 deals in the global real estate, including the development and acquisition of office, hotel, retail, industrial, multi-family, for-sale residential, senior and student housing, and golf assets.through both individual, portfolio and company-level transactions with a gross asset cost of $14 billion. “The US subprime crisis has affected fund raising from the US and Europe. But it is not a long-term problem. Generally, when we underwrite a transaction, we include the cost of hedging and potential currency leakage. Thus currency fluctuations has never been a serious issue for Walton. India is a growing economy, so there is no question of steep fall in real estate prices. The Indian developers are more open to partnering with private equity investors on reasonable terms,” said Mr Goswami. The year 2007 was the banner year for Indian real estate with estimates of over $5 billion of foreign funds flowing into projects. Another theme for the year was public offerings. With DLF listing, which energised the market, several developers proceeded to go public in India, creating a robust market for retail investors, said industry analysts. “ The picture has never been murkier in 2008. With fears of a looming US recession putting the brakes on global growth and its resultant liquidity, a choppy market seems to be ahead. For fund managers, some will view the turbulence as an indication to restrain investing in historically volatile emerging markets. Others will view it as an opportunity to deploy equity into Indian markets which is still buoyant,” said Mr Goswami.WSC, in joint venture with Shriram Properties and Starwood Capital Group, is developing a Rs 5,000 crore integrated township in Kolkata.
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