BackASK invests `100 cr in Mantri project
Project is coming up on the land where another developer was building a shopping mall but couldn’t complete it
Premium(Sunil Rohokale, group chief executive, ASK group.)
Bangalore: Real estate-focused private equity (PE) fund ASK Property Investment Advisors Pvt. Ltd has acquired a majority stake in a Bangalore project of Mantri Developers Pvt. Ltd for 100 crore.
The project is coming up on the land where another developer was building a shopping mall but couldn’t complete it. ASK and Mantri then acquired the project and converted it into a luxury residential development.
This is the second time ASK has invested in a Mantri project; it previously invested ₹ 50 crore in the latter’s Chennai residential project.
“We are actively discussing second investments with two more partners," said Sunil Rohokale, group chief executive, ASK group. “Identifying a good partner is not easy and so it makes sense to do more deals if the partnership is comfortable."
Money for the investment came from ASK’s second fund that had a corpus of about ₹ 1,000 crore. The PE firm has so far committed ₹ 300 crore from its second fund.
Mantri’s Bangalore project is located centrally in Lalbagh area. “This is one of the few developments being undertaken in the heart of the city...This second partnership with ASK group would enable us to execute such projects with agility, which is our strength," said Sushil Mantri, chairman of Mantri Developers.
Earlier this year, ASK closed two back-to-back deals, investing ₹ 100 crore each in projects of Mumbai developers Godrej Properties Ltd and Rajesh Builders. Over the next year, Rohokale said the fund will invest another ₹ 500 crore in four or five projects in cities such as Bangalore, Delhi-National Capital Region (NCR) and Pune.
ASK Property’s investments are specifically drawn towards residential projects that are of 400,000-500,000 sq. ft with apartments of 2,000-3,000 sq. ft priced at ₹ 2-3 crore each.
In the current scenario of paucity of funds in the real estate sector, developers are hungry for capital for requirements that include paying for land, repayment of debt, project execution and other corporate purposes.
Property analysts said that while PE deals will continue to happen in the real estate sector, investors will become more selective. “The quality of projects will matter more to funds than the developers who are executing them. Projects that have approvals and have registered good sales will find more favour amongst PE funds," said Shobhit Agarwal, managing director, capital markets, Jones Lang LaSalle, a property advisory.
ASK Property is also raising money for its first offshore fund of $250 million (around ₹ 13,825 crore today) that it recently registered in Singapore. Road shows for investors will kick off from October and ASK will largely tap family offices and institutional investors to raise the capital.
Rohokale said the offshore fund’s first closing of $100 million will happen by March and the entire capital will be raised in 12-18 months.
On Wednesday, announcing another PE transaction, Motilal Oswal Private Equity Advisors Pvt. Ltd said its India Realty Excellence Fund invested an undisclosed amount in a 16-acre project on the outskirts of Pune that will be developed along with Supreme Universal and Mirchandani Group.
In 2011, PE funds invested around $957.62 million in India’s real estate sector, according to data by VCC Edge, a research platform. This year PE firms have already surpassed that number, clocking $1.014 billion of investments so far in the sector.
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