The investment was made from Brookfield Asset Management’s $4.5 billion global private equity fund
Bengaluru: Canada’s Brookfield Asset Management Inc. has invested $100 million in a clutch of residential projects of Hyderabad-based real estate company INCOR, at a time when many private equity (PE) investors have slowed the investment pace in financing residential projects in India due to an overall slowdown in the sector.
The investment was made from Brookfield’s $4.5 billion global PE fund. It is a structured investment with an equity upside.
“Brookfield has done 11 transactions in residential projects in India so far, and now plans to scale up its investments in this segment, and aims to build a $1 billion portfolio in the residential sector,” said a person familiar with the firm’s plans but did not wish to be named.
Dev Santani, head of residential financing at Brookfield, declined to comment citing company policy.
G. Anand Reddy, co-founder of INCOR, said the transaction will help grow its portfolio of projects at a faster pace while creating more value for all stakeholders, especially customers.
“The transaction is of a structured equity type and will be spread across multiple projects, including existing projects in Hyderabad, totaling 6 million sq. ft and a soon-to-be-launched project in Kompally comprising about 1,100 apartments over 12 acres,” Reddy said. He said a portion of the proceeds would also be used to offer an exit to some of the existing investors.
Before the INCOR transaction, Brookfield’s prominent residential deals in India include a ₹450 crore structured debt investment in Mumbai-based Peninsula Land Ltd’s premium project in Byculla and ₹800 crore in Total Environment Building Systems Pvt. Ltd’s housing projects in Bengaluru, which was mainly towards refinancing the developer’s existing loans.
Brookfield had previously invested in two projects of INCOR but subsequently exited both of them.
In the last few years, Brookfield has rapidly risen as a top investor in India’s commercial office space along side the likes of Blackstone Group LP and GIC Pte Ltd. Earlier this year, it concluded a ₹2,400 crore acquisition of Equinox Business Park, a commercial property of Essar Group in Mumbai’s Bandra-Kurla Complex. In 2016, it bought Hiranandani Group’s office and retail space in suburban Mumbai’s Powai for $1 billion.
While many global investors have chased good quality office projects in India, not all have shown adequate interest in residential projects. Domestic PE funds have also stayed away from aggressively lending to housing sector, which is dotted with slow sales and inventory pile-up, and started looking at investments in office space.
The prominent residential deal this year would be Bengaluru-based developer Prestige Group signing a ₹2,500 crore residential joint venture agreement with HDFC Capital Advisors Ltd to build a mid-income housing platform.
PE inflows in real estate rose 15% year-on-year to $2.6 billion in the January-March quarter, eclipsing the first quarter of the past 11 years, said property consultant Cushman and Wakefield.