Bangalore: Kotak Realty Fund has invested Rs.110 crore in Parsvnath Developers Ltd’s 130-acre township-cum-plotted development project at Sohna in the National Capital Region (NCR), said a fund executive and two people familiar with the development.
The transaction had been awaiting the clearance of a new area master plan for Sohna, which was finally notified this month. Gurgaon in NCR, too, has a new master plan outlining the development and growth plans for the area. Notification of the new area plan offers much relief to investors in real estate, as it brings clarity on which land can be developed and for what use, said Rajeev Bairathi, director, DTZ International Property Advisors.
“Investors may not want to be part of deals where the land is not notified due to the risk associated with it. Once notified, there’s a clear idea on the kind of investments and infrastructure the government would make,” said Bairathi. “Likewise, developers would also be able to attract more customers for projects once this notification process is done.” S. Sriniwasan, chief executive of Kotak Realty Fund, confirmed the transaction but declined to disclose more details.
Parsvnath Developers’ chairman and managing director Pradeep Jain didn’t respond to text messages and calls.
Alongside a slew of transactions in Bangalore, Kotak has made a number of investments in Delhi-NCR. Last year, it put in about Rs.250 crore in two residential projects in Gurgaon being developed by BPTP Ltd and Orris Infrastructure Pvt. Ltd. In 2010, Kotak invested Rs.250 crore in two Emaar MGF Land Ltd projects in Gurgaon and another Rs.85 crore in a residential project of 3C Company in Noida.
The Sohna investment, Kotak’s first in a project with plotted developments, has a non-convertible debenture (NCD) element along with equity.
“The deal structure is such that the fund gets a certain amount of land in the form of plots, which it can sell at a later date,” said one of the people mentioned above, who didn’t want to be named. “The fund can exit in around two years time.”
The project will be launched shortly, after it secures the necessary approvals. The investment was made from Kotak India Real Estate Fund IV and V. Kotak Realty Fund is a division of Kotak Investment Advisors Ltd.
Consultants said plotted development projects, or those that entail sale of plots, in NCR offer quick cashflows. “Anyone who has capital buys property in Delhi-NCR and buying plots is a much quicker process. Besides, approvals of projects, too, are far quicker than (in) its western and southern counterparts of Mumbai and Bangalore,” said the second person mentioned above, also declining to be identified.
In 2012, private equity (PE) funds have invested around $899 million (around Rs.5,007 crore today) in 15 real estate deals in Delhi-NCR, the highest among Indian cities, according to VCCEdge, a research platform.
Last year, $161 million was invested in eight deals in the region. Parsvnath Developers recently said it was reviewing its real estate properties with a view to selling non-core assets, and that it had monetized a few of its projects, in order to reduce its debt.
Parsvnath shares gained 2.94% to close at Rs.38.50 each on Monday on BSE, while the benchmark Sensex rose 0.16% to end at 18,537.01 points.
The BSE Realty Index rose 0.42% to 1,876.97 points.