India’s cash starved real estate sector may get some help from overseas funds.
The New York-listed KKR, a leading global investment firm, has established a non-banking financial company, or NBFC to provide structuredcredit solutions to the real estate sector in India.
For this financial initiative, KKR has tied up for funding with Government Investment Corp, or GIC, Singapore’s sovereign wealth fund.
“The launch of the India-focused NBFC marks a milestone for our global real estate platform, and we are thrilled to bring long-termcapital to India’s real estate sector,” said Ralph Rosenberg, Global Head of KKR Real Estate.
Since launching a dedicated global platform for real estate financing in 2011, KKR has committed over $1.8 billion of equity in 29 realestate projects in the US, Europe and Asia.
Last year, KKR initiated major forays into the real estate business in India by structuring and participating in three transactions withan aggregate amount of approximately $190 million.
India’s real estate sector is still under-built and KKR wants to assist in its development, he said. While many lenders provide debtfor India’s real estate, there is a need for solution-oriented, non-dilutive capital for property developers, he pointed out. “KKR intends to fill thatgap and contribute to the consistent development of India’s residential and commercial real estate sectors.”
This is KKR’s second NBFC in India. Through its first, KKR expanded its capabilities to provide solutions across the capital markets. Fromits own experience, KKR has concluded that India’s large and growing business community welcomes non-traditional entities that allow companies to tap moresophisticated capital markets system and provide them with greater choice beyond traditional sources such as equity or bank loans.
KKR opened its Mumbai office in 2009. In private equity, KKR has been active in India since 2006, with total equity investments exceeding$1.5 billion in companies such as Alliance Tire Groups, Aricent, Bharti Infratel, Coffee Day Resorts, Dalmia Cement, Gland Pharma, Magma Fincorp andTVS Logistics.
Since 2009, KKR has also provided more than $2 billion of structured financing to 21 business groups in India through its credit andcapital markets business.
“The new sector-focused NBFC for the real estate sector further enables KKR to provide tailored financing solutions to companies andadds to our established private equity and lending businesses in India,” said Sanjay Nayar, Chief Executive Officer of KKR India.
KKR aims to provide companies with value beyond capital alone in a way that is best suited to their needs. “This real estate NBFCis the company’s newest platform to move closer to the goal of supporting good management teams to help their entities grow.”
