Carlyle Eyes Larger Share of Realty Business

By: Propertiesmls

Global PE major Carlyle is eyeing a larger share of the booming realty business in India. The fund, one the largest private equity funds in the world with more than $75.6 billion of assets under management, is looking to make entity-level investments in real estate companies in India.

While most PE funds are looking to exposure only in specific projects floated by real estate companies, Carlyle is keen on buying stake in the parent company. Since real estate as a sector continues to be largely unorganised in India, funds shy away from taking stake in the parent company and prefer to buy stakes in specific FDI- compliant projects.

Though an exact figure is not known, sources say that Carlyle is keen on having a significant exposure into the real estate sector and is looking at an allocation of about Rs 600-800 crore out of the existing Asia fund. It is not known whether Carlyle will buy stakes only in listed real estate companies or will also have unlisted companies in its portfolio.

In either case, the fund will buy only minority stakes in real estate companies in India. 'The buyout fund can invest at enterprise level viz developers. The fund is looking at a sizeable exposure in the sector,' said a source. Carlyle MD Rajeev Gupta declined to comment.

Carlyle, which is investing in India through its $1.8 billion Asia buyout fund and several sectoral funds, has made only one significant investment till now. It has invested $650 million in financial services company HDFC. But according to the Thomson Financial data, Carlyle has been making investments in India since 2000 and till now has struck 21 deals.
This year alone, besides HDFC, the fund has bought stake in Allsec Technologies, Elitecore Technologies and Great Offshore. The fund also has stake in SSKI Investor Services where it has invested over $3 million in two rounds of funding, according to the Thomson Financial data.

Compared to its competitor Blackstone, Carlyle has not managed to strike that many big deals. In the past one year, Blackstone has struck five deals totalling $749 million including the buyout of BPO firm Intelenet for $109 million. The fund has also invested $275 million in Eenadu group, $150 million in Nagarjuna Construction, $165 million in Gokaldas Exports and $50 million in Emcure Pharmaceuticals.

Real estate as a sector has never had it so good. In the last few years, most global funds have been looking at huge India exposure. Merrill Lynch forecasts that the Indian realty sector will grow from $12 billion in 2005 to $90 billion by 2015. Some of the global financial institutions that are aggressively looking to invest in India's real estate space include Blackstone, Morgan Stanley, Trikona, Duestche Bank, Goldman Sachs, Credit Suisse, Wachovia Corporation and Warbus Pincus. Experts say the total corpus with these funds for real estate alone is $12-15 billion.

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