HDFC property funds likely to sell stakes in residential projects
I
n coming months, HDFC property funds may sell its stake in three residential projects back to the developers. HDFC property fund is a real estate-focused private equity (PE) fund of HDFC.
With an investment of around Rs 219 crores($40 million), the company will have profit of around Rs 600 crore ($110 million). The three developers include Lodha Developers Ltd, Sterling Developers Pvt. Ltd and Paranjape Schemes (Construction) Ltd .
A part of stakes in property fund will be sold in a project by Lodha developers in Hyderabad to a real estate firm. The entire holdings will be sold out in the projects by Sterling Developers and Paranjape Schemes in Bangalore and Pune respectively.
This year, it may be possible that HDFC property fund sell back either all or part of its stake in the project of Sterling Developers in Bangalore and the remaining stake in the year 2014.
HDFC fund manages both domestic (Rs.1,000-crore) and global fund ($800 million). It also manages HIREF International LlC and an information technology (IT) corridor fund. This IT corridor fund invests in properties which generate rents.
The exit of HDFC will be more important when many other property funds are striving for profitable exits. It may be because of several reasons which also include slowdown in sales and liquidity concerns. According to the analysts these successful exits will prove fruitful for investors who are still investing in Indian real estate.
The fund sold its investment in Manyata Business Park in Bangalore. It invested Rs 210 crore and earned Rs 490 crore in the year 2011. In the same year, it also sold back a 10% stake in a project of L&T. They invested Rs 87 crore and earned Rs 122 crore. But in 2012, PE exits fell sharply in the real estate sector.
From past six months, HDFC property fund is striving to raise fund ($ 500 million) from international investors for new real estate fund. Such a situation is also faced by other real estate-focused PE firms.
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