Essel Finance to deploy Rs600 crore for residential projects

Bengaluru: Essel Finance Advisors and Managers Llp, the private equity (PE) arm of Subhash Chandra’s Essel Group, is planning to extend Rs.600 crore debt finance to property developers as part of its real estate focus, a top executive said.

Essel Finance Advisors, which has already invested around Rs.250 crore in Mumbai, Bengaluru, Pune and the National Capital Region (NCR) from its real estate-focused India Asset Growth Fund, is looking at opportunities to invest more in residential projects.

While the mid-term focus will continue to be on real estate, the fund plans to diversify its portfolio and invest in other sectors such as infrastructure and education towards the end of the financial year.

Though the PE arm was set up in 2012, the fund is aggressively and proactively looking at deals now, given the demand for capital in the real estate sector.

“The current market is an opportune time for locking in deals at attractive rates as interest rates are witnessing a downward trend,” said Abhinav Bhushan, chief executive officer, PE, at Essel Finance Advisors.

The fund has set an internal target to do one deal a month from this new corpus.

“We have already locked in deals worth Rs.180 crore in Mumbai and Pune, and are at an advance stage of closure,” said Bhushan, who was Essel’s investment banking head before he became head of the real estate fund in early 2014.

Domestic PE funds are largely focused on investment opportunities in the residential segment. Essel Finance is scouting for deals in projects that are at an advanced stage, with all approvals in place and sufficient sales visibility.

The fund will continue to focus only on the top few property markets including Chennai in the mid-income and affordable housing segments that have “the ability to provide stable returns even in stagnant markets”, said Bhushan.

So far, Essel Finance has invested in Parsvnath Developers Ltd’s Gurgaon project, Mumbai-based Ariisto Realtors’ project, Bengaluru-based Unicon Shelters, Assotech Realty Pvt. Ltd’s mid-income projects in Noida and Ghaziabad, and more recently in Pune-based Maple Group’s affordable housing segment Aapla Ghar.

Besides real estate, Bhushan said the firm has received investment proposals in the infrastructure and education space at attractive valuations.

By the end of this financial year, Essel will look at these opportunities, he said.

“Debt financing is here to stay because liquidity is a perpetual need in real estate. There are few funds offering pure equity to developers, and the larger market still wants to lend with a certain amount of guaranteed returns,” said Chintan Patel, partner, transactions and restructuring, real estate and hospitality at consulting firm KPMG India.

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