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January 19, 2016

Private Equity investments in Real Estate crosses $5-B in 2015 to Highest Level Since 2008

Year witnesses several JV platforms being created by large investors & established developers

Private Equity Real Estate (PERE) firms deployed over $5 billion in Indian Real Estate companies and projects – the highest since the financial crisis of 2008. According to research from Venture Intelligence, a provider of data on private company financials, transactions and their valuations, PERE firms made 90 investments in India during 2015. Of these, 85 transactions had an announced value of $5,061 million. While the activity level was 20% higher compared to the 75 investments in the previous year, the transaction values spiked significantly compared to 2014 (which had witnessed reporting of $2,214 million across 57 deals with announced value).



The Venture Intelligence study pointed out that 2015 witnessed several Joint Venture (JV) platforms being created between large investors and established developers. Standard Chartered announced that it will invest $302 million or INR 2,000 crore in Tata Realty & infrastructure to form a INR 3,000 Cr investment platform to buy commercial assets across the country.  Goldman Sachs committed $300 million or INR 1,850 crore to a 74:26 JV with listed developer Nitesh Estates again focused on commercial real estate assets. Warburg Pincus invested $175 million in a JV with the Embassy Group (which invested $75 million) to build warehouses across the country.

Piramal Realty attracted minority equity investments of $150 million (INR 900 crore) from Goldman Sachs and $284 million (INR 1,800 crore) from Warburg Pincus to be used for its residential projects in Mumbai.StanChart PE, IFC and ADB together decided to invest $200 million (INR 1,280 crore) for a 70% stake in a joint venture with Shapoorji Pallonji Group that will focus on the affordable housing segment. 

Among the bigger transactions in 2015 was Blackstone’s buyout of Gurgaon-based builder Alpha G: Corp for $301 million or INR 1,600 crore. The deal marks the first full buyout of a real estate company in India. Singapore sovereign wealth fund GIC formed a joint venture with DLF Home Developers, a wholly-owned subsidiary of publicly listed DLF, to invest $300 million or INR 1,990 crore to develop projects in two land parcels acquired by DLF in Delhi. 

Residential projects accounted for over 71% of the investments by volume (and almost 80% including townships) during 2015, followed by commercial projects with a 10% share of the pie, the Venture Intelligence data showed.

Among the bigger transactions in 2015 was Blackstone’s buyout of Gurgaon-based builder Alpha G: Corp for $301 million or INR 1,600 crore. The deal marks the first full buyout of a real estate company in India. Singapore sovereign wealth fund GIC formed a joint venture with DLF Home Developers, a wholly-owned subsidiary of publicly listed DLF, to invest $300 million or INR 1,990 crore to develop projects in two land parcels acquired by DLF in Delhi. 

Residential projects accounted for over 71% of the investments by volume (and almost 80% including townships) during 2015, followed by commercial projects with a 10% share of the pie, the Venture Intelligence data showed.

Piramal Fund was the most active PERE investor during 2015 announcing 13 new investments in 2015, followed by Edelweiss Capital (6 deals). GIC, Goldman Sachs and India Infoline RE reported four deals each. 

Source: Venture Intelligence PE-RE Deals Database

For a copy of the full PE in Real Estate 2015 report, which includes additional data points including on top exits, etc. Contact Venture Intelligence .