Essel to invest Rs.1000 Cr in residential realty

Essel Financial Services Ltd.’s private equity wing will invest Rs.1000 Cr in residential realty. The new PERE fund of the Essel Group will be invested for developing residential projects across the top cities.

Bangalore: Essel Financial Services Ltd.’s private equity wing will launch a new fund. The new fund of Rs.1000 Cr is expected to be invested in the residential sector for developing housing projects in the top cities. This is the first PERE fund of the group.

The number of PERE deals in India is increasing. Compared to the 15 PE deals of 2011, last year witnessed 32 PE deals. The amount also rose highly.

While $310.88 million PERE fund was invested in India in the year 2011, last year it rose to $464.26 million. The number of private equity deals is not less this year too.

Developers are in dead need of fund. Many of the projects are halted just because of financial issues. Thus the developers raise high demand for investment funds.

This would be what prompts the Essel Group to raise a PERE fund. They are sure that the fund will be easily invested in the real estate sector without having lot of troubles.

Essel Group plans to raise the fund from investors from India. The group will raise Rs.500 Cr in the first phase of the fund. Another Rs.500 Cr will also be raised, said a person with direct knowledge. Essel Financial Services Ltd is owned by Subhash Chandra.

While commenting on the development, Essel Group CEO and MD Amit Goenka said that many projects are delayed due to the financial issues. He added that the developers raise good demand for funds. However, he added that delay of approvals also a reason for delayed projects.

In his opinion developers are turning to the PE firms now. Due to the sluggish real estate market, banks are reluctant to offer loans to the developers. This also boosts PERE investments.