Wednesday, November 25, 2009

"Completion funding" catches Private Equity Funds' fancy

Completion financing, or last-mile funding, where developers get funds to complete projects stuck midway, is catching on among private equity (PE) funds.
Realty developers are facing problem on several fronts. While banks are still shying away from lending to developers, raising money through initial public offerings (IPOs) remains a distant dream for them. In this situation, PE funds are eying completion financing deals as these deals carry lower risk and attractive valuations.

A host of property funds managed by PE players such as Red Fort Capital, Saffron Asset Advisors, ASK Investment Holdings, Kotak Realty Funds Group are in talks with developers in metros such as Mumbai, Delhi, Chennai and Bangalore to for such deals.

Funds say completion financing deals take a lot of work from funds compared to normal financing deals, though return expectations are similar. Normally, funds expect returns of 20-30 per cent in realty projects.

“These kind of deals are not marketed actively, but are done subtly. Hence, these opportunities depend on relations and how prudently and intelligently you pursue them,” says Ajoy Veer Kapoor, managing director of Saffron Asset Advisors.

To read more, please, visit Business Standard

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