KKR India Asset Finance Pvt. Ltd committed more than $500 million to residential projects in India in 2017, the highest in any year for the local real estate investment unit of the global private equity firm.
With this, it has invested about $1 billion in real estate projects in the country so far and plans to scale up investments even more next year.
Major deals it has inked this year include a Rs450 crore investment in Lodha Group and Rs315 crore in Runwal Group in Mumbai, Rs500 crore in Bhartiya City Developers Pvt. Ltd’s Bengaluru township project, Rs200 crore in Signature Global’s affordable housing project in Gurugram and Rs300 crore across three projects of Chennai-based Prince Foundations Ltd.
Lending to affordable housing projects and construction finance have been the two focus areas of KKR India Asset Finance in 2017.
“This year, we have focused on affordable housing projects (in addition to other segments), which is in sync with our long-term, sustainable investment strategy and the overall demand for capital in this space. We have also started focusing more on offering construction finance which enables us to service various capital needs of the sector," said Sanjay Nayar, CEO, KKR India.
Singapore’s sovereign wealth fund GIC Pte. Ltd is an investor in KKR India Asset Finance, the non-banking finance company (NBFC) of Kohlberg Kravis Roberts and Co. LP (KKR). Ashish Khandelia heads KKR’s real estate investments in India.
Though the NBFC inked its first real estate transaction in June, 2014 investing about Rs350 crore in Mumbai-based Wadhwa Group’s luxury homes project The Address in suburban Ghatkopar, it was after GIC’s capital infusion when it started actively deploying money.
“KKR has a scalable investment platform and intends to provide customised solutions to developers across the capital stack to address their various funding needs. It has been a good year for the firm and it intends to focus on partnering with good quality developers," said a person aware of KKR’s plans, but didn’t wish to be named.
Top real estate investors put in around $1,096 million in equity in building projects and $501 million in debt financing, totalling $1,597 million between January and June, says data from News Corp. VCCEdge.
“We believe the need for capital in the sector will further increase next year in the new regulatory regime and cash flows generated by customer advances is a longer process now," Nayar added.
NBFCs have been increasing their exposure to real estate and expanding the scope of investments beyond residential projects, giving tough competition to private equity (PE) funds. While many home-grown PE firms have been investing cautiously, NBFCs haven’t really slowed despite downward pressure on lending rates.
The common link between the two, however, is the focus on budget housing projects.
“Affordability is just one aspect and only price of homes is not enough today. What also counts is the product and brand positioning along with connectivity and infrastructure support," said Amit Bhagat, chief executive and managing director, ASK Property Investment Advisors.