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China's Fosun International plans to invest US$ 1 billion via realty private equity platform

Economic Times:  September 15, 2016

New Delhi: Chinese conglomerate Fosun International is making an entry into the Indian real estate space and plans to invest close to $1 billion through a real estate private equity platform it is setting up here, said two people aware of the development.

The diversified investments firm is bringing on board Apurva Muthalia, the CEO of Aditya Birla Real Estate Fund, to head this new arm in India, which will first start with buying income-producing rental assets in the country, just like Blackstone and some other large global funds have done so far. "It will also buy some development assets in the top cities that will be developed later when they set up a construction arm here to build large projects," said one of the persons, requesting anonymity. Fosun is also in talks with real estate fund businesses in India including Rising Straits Capital to invest monies in their funds.

"This is similar to what large investors like GIC do. They put money in other funds and also make investments on their own when an opportunity arises. Fosun will have a similar play here. They are already looking at buying an asset in Mumbai," said the second person.

An email questionnaire sent to Fosun International did not elicit any response till press-time. Muthalia could not be reached on Wednesday despite several calls and text messages.

A spokesman for Rising Straits Capital declined to comment. This comes just months after Fosun bought PE firm KKR-backed Gland Pharma for $1.4 billion and also set up a general private equity business in India. It has hired former Standard Chartered Private Equity executive Rahul Raisurana to head the venture.

Many large global institutional investors have been eyeing rental assets across India, which are seen as very safe investments. The likes of Blackstone, Brookfield Asset Management, GIC, Ascendas and others have picked up assets in the past few years, creating large portfolios in the country.

In June 2014, Brookfield Asset Management had picked up 100% stake in four SEZs and 60% in two other assets owned by UnitechBSE 2.79 % and Unitech Corporate Parks for about Rs 3,500 crore. Blackstone owns the largest office portfolio in the country with over 30 million sq ft of operational commercial office space and another few million sq ft under construction. India's largest real estate developer DLF is in the process of selling its promoters' 40% shareholding in the company's rental arm DLF Cyber City Developers Limited which holds 26.8 million sq ft of rented office assets.

A few of these institutional investors are eyeing setting up real estate investment trusts (REIT) on the Indian stock market, the guidelines for which were finalised by Indian authorities recently.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.