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November 23, 2014

How Piramals cracked the Private Equity in Real Estate puzzle

From the Forbes India profile:
Given the scope of its services, while all realty funds have a takeover clause in their contracts, Piramal Fund Management has the actual capability to do so if a developer reneges on his commitment. Take, for instance, the fact that no other fund offers construction finance or has funds for specific situations like the apartment fund or the Mumbai Redevelopment Fund.  
As a result, Piramal Fund Management has Rs 12,000 crore to invest in real estate across the country. It helps that Piramal Enterprises is flush with funds and has over Rs 4,000 crore of investment riding on the venture.   
...This is particularly relevant since, as Jijina points out, work doesn’t end once the money is lent. It is important to track the investment, he says, because, for instance, the telltale signs of a default with a developer start to show far before the actual non-payment issue crops up. For instance, if cement is being diverted from one project to another, Jijina expects his employees on the ground to communicate that fact. Or if a developer is not honouring his commitments to suppliers, that must be reported back too.
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