Peninsula Brookfield invests Rs100 crore in Mahaveer's housing projects

Bengaluru: Private equity (PE) firm Peninsula Brookfield Investment Managers Pvt. Ltd has invested Rs.100 crore in mid-income housing firm Mahaveer Group’s projects in Bengaluru, said two people familiar with the transaction.

The money will be used by the developer as working capital for five projects that are in an advanced stage of construction in different parts of the city and to partly refinance loans.

This would be the sixth investment by Peninsula Brookfield India Real Estate Fund, the Rs.1,200-crore maiden fund of the PE firm which is a venture of real estate firm Peninsula Land Ltd and global alternative asset manager Brookfield Asset Management. It typically invests in the form of structured debt by subscribing to non-convertible debentures (NCD).

The fund, which has deployed about Rs.800 crore across the six transactions, needs to deploy the remaining Rs.400 crore before March.

It started deploying capital in 2014 and was expected to finish investing the total corpus by March 2015. When it failed to do so, the fund got a year’s extension to finish investments.

“The fund has been cautious and has mainly been investing in late-stage projects, which entail less risk. It plans to do 1-2 more deals by March; but, even then, it will remain cautious about the transactions it closes,” said one of the two people mentioned above, who didn’t want to be named.

Dev Santani, head-investments, Peninsula Brookfield Fund, declined to comment.

Bengaluru-based Mahaveer Group has 32 projects under construction, and sells homes at a starting price of Rs.40 lakh and up to Rs.2 crore.

Although it builds premium homes, it has been focusing on affordable homes. The realty firm has also raised money from other investors, including Motilal Oswal Real Estate Fund and ICICI Venture Funds Management Co. Ltd.

“We will use the Peninsula Brookfield money for our projects and to refinance the money we raised from Motilal Oswal,” said Praveen Kumbala, managing director, Mahaveer Group.

The group raised about Rs.62 crore from Motilal Oswal in 2014. Peninsula Brookfield has also made its first exit from its 2014 investment in two projects of Total Environment Building Systems Pvt. Ltd.

The realty firm has refinanced the money with lower-cost capital from another investor, said Kamal Sagar, principal architect and chief executive of the Bengaluru-based real estate firm.

Private equity funds have been eyeing investment opportunities in cities such as Bengaluru and Pune, where home sales have been better than in the other cities, and looking at projects in the mid-income category.

“Bengaluru, Pune and Mumbai are the preferred investment destinations, given a situation where a lot of sales and absorption is happening—in contrast to the NCR (National Capital Region),” said Chintan Patel, partner, transactions and restructuring, real estate and hospitality, at KPMG India, a consulting firm.

India doesn’t have a problem with demand for housing, but affordable housing projects are clearly showing better sales than premium projects, Patel said.

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