 "PE in real estate highest in first nine months of 2015 since 2008: report")
This is an increase of 84 per cent over the corresponding period in 2014, signifying the growing confidence of PE investors in India’s real estate sector, said a new report by Cushman & Wakefield and Global Real Estate Institute.
The total number of deals in the period under review was recorded at 61, against 52 in the year-ago period. The average deal size also increased during the first three quarters of 2015 to Rs 300 crore ($47 mn), against Rs 190 crore ($30 mn) a year ago.
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Nearly two-third of total PERE investments made during the first three quarters of 2015 were at special purpose vehicle (SPV) level and that too through structured debt / mezzanine route, the report said. Pure equity or entity level deals which were favourite amongst the Private Equity funds during the 2006-08, almost dried up in 2012. However, post formation of a stable, growth-oriented government in India, investor confidence has renewed and private equity funds and financial institutions have started making investments at entity level. As a result, nearly 22% of the total investments volume committed in 2015 (YTD) were at entity level.
Foreign funds led the investment activity ($1.7 billion) with nearly 59% share in the total investment volume till YTD 2015, followed by domestic funds which had about 41% share ($1.2 bn). Majority of the foreign investment were from funds based out of Asia-Pacific region (excluding India) followed by North America.
Despite domestic funds contributing a larger number of deals (45 out of 61) in the first nine months of CY15, the foreign funds had a larger average deal size $104.7 million as compared to domestic funds’ average deal size of $26.7 mn signifying a larger appetite of foreign funds for investments.