Macquarie to invest in realty projects in India

Macquarie Infrastructure and Real Assets (MIRA), an arm of Australia’s Macquarie Group Ltd, which manages over $100 billion of assets across funds globally, is set to invest in real estate projects in India, three people familiar with the development said.

MIRA has appointed R.K. Narayan as managing director of its Indian arm, Macquarie Infrastructure and Real Assets (India) Pvt. Ltd, to head real estate investments in India.

Narayan was a consultant with real estate investment firm Aevitas Property Partners before his appointment, and also served as the chief operating officer at Infinite India Investment Management Pvt. Ltd.

MIRA is in talks with Mumbai-based real estate firm Tata Housing Development Co. Ltd, a subsidiary of Tata Sons, to jointly set up an investment platform to invest in luxury residential projects. If the transaction goes through, the partners are expected to pump in at least $200 million of equity capital into it, though the shareholding may differ.

When contacted, Narayan confirmed his appointment but did not give details.

“Macquarie has been planning to invest in real estate in India for a while and has put together a team specifically to make investments in the sector. It’s a good time for Macquarie to start investing because there is a lot of demand for capital, particularly equity, and valuations are reasonable after a long slowdown spell,” said one of the three persons cited above, on condition of anonymity.

Macquarie declined to comment.

MIRA is a large infrastructure asset manager globally and also has portfolios in real estate, agriculture and power across countries. Its growing real estate portfolio includes 290 retail, commercial, residential and industrial properties in China, Mexico and Australia.

Macquarie invested in India, up until 2013, through two infrastructure funds—Macquarie-SBI Infrastructure Fund (MSIF) and SBI-Macquarie Infrastructure Trust (SMIT), joint ventures between State Bank of India, Macquarie and International Finance Corp. (IFC), an arm of the World Bank.

That apart, Macquarie has also done transactions through its investment vehicle MAIF Investments India, Mint reported on 27 July.

Suresh Goyal is the India head of MIRA and primarily looks after infrastructure investments.

“Macquarie and Tata Housing have been in talks for an investment partnership for the last couple of months, and an expression of interest has been signed. Tata Housing is also speaking to a couple of other investors, and one of the three will be finalized shortly,” said the second person cited above, also on condition of anonymity.

In May, Tata Housing got an investment commitment of $25 million from IFC for its affordable housing subsidiary, Tata Value Homes.

At a time when home sales are down, and cash flows are weak, real estate developers are relying heavily on external sources of capital to propel business and boost growth.

Through this platform, Tata Housing will add scale to its growing luxury residential business, after focusing on low-cost and mid-income housing for the last few years.

Macquarie joins a slew of other global investors who are looking to fund real estate projects in the country.

Private equity funds invested about $2.4 billion in the real estate sector, across 53 transactions, during the first nine months this year, surpassing the full-year investments of $2.1 billion in 2014 across 80 deals, according to data from VCCEdge, which tracks investments and is the financial research platform of VCCircle.com.

The bulk of this came in from global investors such as Warburg Pincus LLC, Goldman Sachs Group Inc. and GIC Pte. Ltd.

“Given the kind of economic revival India is poised for, it is a good time to invest, and it would help Macquarie with its pedigree and ability to go out and raise capital from the market. Having invested in India already, though in infrastructure so far, they are well-versed with the challenges and nuances of making investments here,” said Shashank Jain, partner-transaction services at PricewaterhouseCoopers India.