PEs homing in on Tata’s low-cost Boisar project
The Economic Times, September 10, 2009, Page 4
SEQUOIA CAPITAL, ATLANTA EQUITY IN TALKS TO BUY MINORITY STAKES
Sanjeev Choudhary NEW DELHI
TATA Housing is in preliminary talks with Sequoia Capital and Atlanta Equity to raise funds for its hallmark affordable housing projects, signalling a larger recovery in the real estate sector which was shunned by private equity players altogether ever since the onset of the economic slowdown late last year.
The two firms have begun talks with the Tata Sons subsidiary to pick up minority stakes into its existing low-priced housing project in Boisar near Mumbai and around three other affordable housing projects expected to be launched in the next few months, a person close to the development said.
Tata Housing CEO Brotin Banerjee declined to comment for the story.
The two PE players want to pick up stake in Tata’s projects because they are low-risk projects with decent return and the expected returns are up to 30%, the person said requesting anonymity. With the realty downturn setting in early 2007 and risk perception rising, most private equity funds stayed clear of the real estate sector. Private equity players have been waiting for customer demand to return and project valuations to come down. Faced with miniscule sales and huge debt burden, developers’ expectations of valuation have now declined, prompting PE players to take a relook.
Sequoia capital, the venture fund that is known for investing in world’s biggest technology firms including Apple, Google, YouTube and Yahoo, has invested across sectors in India. Its investments include Cognizant Technology Solutions, Cafe Coffee Day, Idea Cellular, Edelweiss Capital and SKS Microfinance. The firm had marked about $1.8 billion out of its total $10 billion to India.
If a deal with Tata Housing goes through, it could perhaps be its first in the real estate. Ditto for Atlanta Equity, an Atlanta-based $109 million fund founded in 2007.
Tata Housing is building 1000 apartments at Boisar, around 100 km from southern end of Mumbai, with a price tag of Rs 3.9 lakh-6.7 lakh. The project got encouraging customer response due to lower pricing. Tata Housing is now readying plans to launch at least seven more projects, which would have a mix of affordable and midincome homes. At least three of its projects could be launched in the next two months, a company official said. Tata Housing was at the moment focusing on just metros and suburbs as it felt tier-II and III cities will take longer to recover from the realty slump, he added.
The realty firm is taking up projects through joint development with landowners and is also on the lookout for outright purchase of land in a downturn, which has depressed property prices.
HOUSE THAT
Move signals a larger recovery in the realty which was shunned by PEs ever since the onset of the economic slowdown
Faced with miniscule sales & huge debt burden, developers’ expectations of valuation have now declined, prompting PE players to take a relook
Tata Housing is building 1,000 apartments at Boisar, around 100 km from southern end of Mumbai, with a price tag of Rs 3.9 lakh-6.7 lakh
The Economic Times, September 10, 2009, Page 4
SEQUOIA CAPITAL, ATLANTA EQUITY IN TALKS TO BUY MINORITY STAKES
Sanjeev Choudhary NEW DELHI
TATA Housing is in preliminary talks with Sequoia Capital and Atlanta Equity to raise funds for its hallmark affordable housing projects, signalling a larger recovery in the real estate sector which was shunned by private equity players altogether ever since the onset of the economic slowdown late last year.
The two firms have begun talks with the Tata Sons subsidiary to pick up minority stakes into its existing low-priced housing project in Boisar near Mumbai and around three other affordable housing projects expected to be launched in the next few months, a person close to the development said.
Tata Housing CEO Brotin Banerjee declined to comment for the story.
The two PE players want to pick up stake in Tata’s projects because they are low-risk projects with decent return and the expected returns are up to 30%, the person said requesting anonymity. With the realty downturn setting in early 2007 and risk perception rising, most private equity funds stayed clear of the real estate sector. Private equity players have been waiting for customer demand to return and project valuations to come down. Faced with miniscule sales and huge debt burden, developers’ expectations of valuation have now declined, prompting PE players to take a relook.
Sequoia capital, the venture fund that is known for investing in world’s biggest technology firms including Apple, Google, YouTube and Yahoo, has invested across sectors in India. Its investments include Cognizant Technology Solutions, Cafe Coffee Day, Idea Cellular, Edelweiss Capital and SKS Microfinance. The firm had marked about $1.8 billion out of its total $10 billion to India.
If a deal with Tata Housing goes through, it could perhaps be its first in the real estate. Ditto for Atlanta Equity, an Atlanta-based $109 million fund founded in 2007.
Tata Housing is building 1000 apartments at Boisar, around 100 km from southern end of Mumbai, with a price tag of Rs 3.9 lakh-6.7 lakh. The project got encouraging customer response due to lower pricing. Tata Housing is now readying plans to launch at least seven more projects, which would have a mix of affordable and midincome homes. At least three of its projects could be launched in the next two months, a company official said. Tata Housing was at the moment focusing on just metros and suburbs as it felt tier-II and III cities will take longer to recover from the realty slump, he added.
The realty firm is taking up projects through joint development with landowners and is also on the lookout for outright purchase of land in a downturn, which has depressed property prices.
HOUSE THAT
Move signals a larger recovery in the realty which was shunned by PEs ever since the onset of the economic slowdown
Faced with miniscule sales & huge debt burden, developers’ expectations of valuation have now declined, prompting PE players to take a relook
Tata Housing is building 1,000 apartments at Boisar, around 100 km from southern end of Mumbai, with a price tag of Rs 3.9 lakh-6.7 lakh
Posts
No comments:
Post a Comment