FLASH MARKET REPORT INDIA WHY BIG TICKET SOVEREIGN, WEALTH & PENSION FUNDS ARE NOW SCOUTING FOR INDIAN DEVELOPERS
SEPTEMBER 2014
A Cushman & Wakefield Research Publication
In what can be touted as a landmark transaction for the Indian residential real estate sector, the Government of Singapore Investment Corporation (GIC) entered into a INR 1,500 crores (US$ 250 million) joint venture (JV) agreement directly with Bengaluru based company, Brigade Enterprises. Through the joint venture, investments will be made in projects located in South India. This is the second transaction of the kind wherein a fund invested and partnered directly with a development company; usually they pool into a corpus or channel investments through various equity instruments. In 2012, Mumbai based company, Godrej Properties had inked a similar deal with Dutch pension service provider, APG for a sum of INR 770 crores (US$ 130 million) to be deployed over a period of 7 years. KEY TAKEAWAYS Routing investments indirectly through third party fund raised
by general partners/ fund managers allowed GIC and APG to diversify their risk (by exposure to various developers). However, recent transactions (made to Godrej Properties and
Brigade Enterprises) indicate that these funds are now demonstrating a higher level of gumption and confidence in the Indian market, particularly, in the residential sector. Post the 2008-2009 economic crisis, such large sums of
investment have been rare. The two transactions mentioned above usher in a wave of optimism and confidence, in that, developers can now prepare to tap into such agreements. Companies can capitalize on the willingness of sovereign, wealth or pension funds to invest directly and hence, cash in on deep pockets at the land acquisition stage. It must be noted that of the new investments committed,
significant portion can be attributed to single LPs (limited partners)/investors who have well-lined purses such as Abu Dhabi Investment Authority (ADIA), Qatar Investment Authority (QIA), APG, Canada Pension Plan Investment Board (CPPIB); these enterprises are now ready to commit upwards of USD 200 million per platform (on an average).
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