Private Equity wing of Essel Financial Services Ltd plans to launch its first real estate fund. The Rs.1000 Cr PERE fund will be invested in the residential sector.
Essel plans to raise Rs.1000 Cr for investing in residential sector.
MUMBAI: Private Equity wing of Essel Financial Services Ltd has already raised Rs.200 Cr. The fund will be invested in the real estate sector. Essel Group plans to develop housing projects in top cities across the subcontinent.
Private equity in real estate (PERE) is increasing in India. 2012 saw 32 PERE investment deals. Nearly PERE Funds worth $464.26 million was invested in last year. This is well above $310.88 million in 2011 which saw only 15 such deals.
The PE wing of Subhash Chandra-owned Essel Group plans to launch a Rs.500 Cr fund. The group also has plans to raise another fund of the same amount. The fund will be raised from domestic investors.
Essel Financial Services CEO and MD of Amit Goenka said that developers raise huge demand for capital. He added that most of the projects are stuck, due to the lack of capital. He finds delay in approvals as another reason for the stuck projects.
Essel Group’s PE Wing plans to raise a real estate fund.
Realty firms are now more turning towards PE companies for investment. Banks remain cautious to offer loans. The sluggish realty market, delay in approvals, etc. are some of the reasons which banks place forward. Home sales are also down in many of the cities.
On the other end, PE firms are investing more in the residential sector. Housing segment is more viable and reliable than the commercial sector. Office space development is not the pick for any of the PE firms.
Essel group has achieved the approval of Securities and Exchange Board of India. Out of their first fund they have already invested nearly Rs.80 Cr in a Mumbai residential project.
Essel Group has invested another Rs.40 Cr in a Chennai project and Rs.60 Cr in Gurgaon. Mr. Goenka said that the group expects to raise the entire amount within three to four months’ time.