Fundraising ceremony for developers again

Fundraising ceremony for developers again
The Economic Times, July 31, 2009, Page 15

Private equity players are building up funds for small companies in the realty business

Anirvan GHOSH

SMALL AND medium businesses (SMBs), especially in the real estate sector, have reasons to cheer. Private equity firms say they will raise more than $300 million by October, most of which will be used to fund SMBs in the infrastructure and realty space.

Mumbai-based Sage Capital is raising $100 million by September. The funds will be used exclusively to fund SMBs in the areas of infrastructure, real estate and energy. The fund will be looking at small firms, which have a topline of Rs 50 crore or above. It plans to invest from Rs 30 crore to a maximum of Rs 70 crore in each of these firms. Sage Capital’s managing director Manish Kanchan confirmed his fund’s plans but refused to name the companies he is zeroing on. “It has been easier to raise funds in the second half of this year, and we can get cheaper valuations,” he says about Sage’s decision to raise fund at this point in time.

Saffron Asset Advisors plans to raise $105 million by October. “We are looking at smaller players in the real estate sector with serious growth potential,” says managing director Ajoy Veer Kapoor. Saffron has already lined up a few projects for investment through the new fund, and will be announcing these shortly, he adds. The firm eventually plans to raise $500 million over eight years. Standard Life will invest $75 million in fund, which will invest in projects across India, and in SMBs in Tier 2 and 3 cities. Saffron earlier raised 220 million euros through its Euronextlisted Yatra Capital for investing in the Indian real estate market. Venture capital firms invested $117 million over 27 deals during the first six months of 2009, according to a joint study by Venture Intelligence and Global India Venture Capital Association. That was substantially lower as compared to $413 million invested in 67 deals during the first half of 2008 and $402 million invested in 75 deals in the second half.

Things seem to be getting rosier this second half. ASK Investment Holdings is raising $100 million this year, and intends to pick up between 26% and 50% stake in residential projects. “We are into just a notch above low-cost homes,” says managing director Sunil Rohokale.

CSC Group, which is building affordable housing in Bangalore, is in talks for a $15 million funding from such PE players. “We have the model to scale up fast, and are in talks with them,” says CSC’s CEO PC Sukanand.