Some PE firms exit the realty market with handsome returns
The privat
e equity (PE) firms are looking at exiting out of the real estate companies due to the slowdown in the economy and the slump in the Indian property market. When they exited their investments, many made a handsome profit too.
According to a recent report by Brookfield Financial, until March 2014, nearly a fifth, amounting to $6.9 billion of PE investments out of the total institutional PE capital deployed has exited the real estate market. Earlier there was a buzz in the market that the PE funds are stuck with the real estate investments and are unable to exit the market after locking in some good returns. However this buzz turned out to be untrue.
Sourav Goswami, principal-head of capital markets at Red Fort Capital which had invested $ 1 billion in the real estate market and managed to exit with some profit margins has made some interesting observations. According to him the exits in India will accelerate into the second half of this year and next. The residential projects in which these PE firms had invested, have matured now, and have generated enough cash flow for the investors to exit along with their capital and profits.
However Jones Lang LaSalle (JLL India), a property consultancy has a data which is very impressive for the Indian Realty market. Performance in the last six years is even better and India fares better compared with other property markets, irrespective of whether the exit has come through a third party or promoter buyback. Shobhit Agarwal the managing director at Capital Markets at JLL India is very positive about the Indian property market and mentioned that the factor that matters the most is if the fund has derived good returns from its investment or not. Many other experts too are of the same opinion.
Source- The Economic Times
Brookfield Asset Management, Brookfield Property Group, Jones Lang LaSalle, Jones Lang LaSalle India, Private equity (PE) firms, Private Equity firm (PE), Private equity firms, Private equity funds
