Bangalore: Bangalore-based realty developer Nitesh Estates plans to raise $100 million (Rs420 crore) from private equity firms in the next six months to fund its projects and enter new markets.
This is the firm’s second round of fund raising. It has raised more than $250 million from Citigroup Inc. and $51 million from US-based hedge fund Och-ziff Capital Management Group in the past 12 months. “We will raise money in the holding company and enter new markets such as Pune, Kolkata and Hyderabad,” said managing director Nitesh Shetty.
Funding strategy: Nitesh Shetty, managing director of Bangalore-based realty developer Nitesh Estates
Last year, Nitesh Estates tied up with Citigroup to build shopping malls worth around $300 million in three-four year across southern India—in cities including Chennai, Thiruvananthapuram, Kochi and Bangalore. Citigroup has earlier partnered Nitesh for the Ritz-Carlton hotel project in Bangalore, and the two have another five-star hotel project in the pipeline, Shetty said.
HDFC Property Fund is also likely to invest around $20 million in the realtor’s first retail project, Nitesh Mall at Indiranagar in Bangalore. Shetty declined to confirm it, saying, “It’s premature to talk about the deal and an announcement would be made when it’s done.”
Faced with declining sales, many developers are getting into private equity partnerships with both parties bargaining hard, said Naresh Dandapat, regional director (south) at property consultancy Knight Frank India. “But the fact is most of the private equity deals have become very expensive.”
“Though the market condition isn’t conducive for raising funds, many developers are being forced to do it,” he said. “It wouldn’t be easy for a developer to raise money now.”
Nitesh Estates is currently developing around 8 million sq. ft in Bangalore, Chennai and Kochi.
The real estate company has now also floated its own construction firm called Nisco Ventures. Shetty said Nisco would execute not only in-house projects but also undertake projects of other companies on the lines of Larsen and Toubro Ltd.
Nitesh Infrastructure, a group company, was shortlisted last year for a Rs2,000 crore shipyard-building project at the Kandla port along with Essar Construction Ltd and Bharati Shipyard Ltd. “The project has been put on hold because port authorities have to complete acquiring some land and complete other formalities,” Shetty said.
Nitesh Estates will launch seven projects after October that include a high-end villas and condominium project in Bangalore, a villa project in Goa and a residential project in Kochi.
“We have pushed the projects towards the end of the year because it’s not really a good time to launch projects. Hopefully, market conditions will improve ahead of the festive season,” Shetty said.