
Private Equity in Indian Real Estate. T. Srinagesh CEO, Pragnya Advisors Pvt. Ltd. August 2012. Contents. Indian Real Estate – Growth and Opportunity. The opportunity for PE Funds. How PE Fund invests. Pragnya Fund. Indian Real Estate – Growth and Opportunity.
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But Still the Long Term Story…….
Demographics
Source: US Census Bureau
3
Urbanisation
Source: Indicus Analytics
4
Evolution of The Middle Class
Middle class will increasingly influence with growing incomes, purchase of lifestyle products – houses, cars, luxury wear, etc.
Source: Bhalla S. S.,
Note: Middle class is defined in the above chart as a family of four with a household income of Rs. 150,000 per annum
5
Source: Indicus Analytics
6
Under Leveraged Consumer
Source: GS Calculations, Global Economics Paper: 169
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Indian Real Estate – Growth & Opportunity
What Happened – 2005 through 2012
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Indian Real Estate – Growth & Opportunity
What Happened – 2005 through 2012
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Indian Real Estate – Growth & Opportunity
Where we are now – post slowdown, regeneration and resilience
10
Indian Real Estate – Growth & Opportunity
Where we are now – post slowdown, regeneration and resilience
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10
If there is will, the situation can be changed
10
The nature of PE Funds
19
Only qualified people (financially savvy) can be sourced for funds
NO GENERAL PUBLIC
HNIs
Pension funds
Hedge funds
Corporates
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Major Real Estate Funds in India
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Establish an Indian company to mange the fund
Establish a tax efficient vehicle, e.g.., Mauritius
Experienced Sponsors put seed money
Close the fund after a term and share profits
Raise money from LPs
1 Year
2 - 3 Years
5 - 7 Years
Fund Raising Cycle
Portfolio Exit Cycle
Fund Deployment Cycle
24
PE – An important bridge for business scale up
IPO
PE investor
Strategic investor
Angel investor
Own Money
Compliances and regulation increases
25
PE – How do they help businesses
Enhances enterprise value
Exit ensures efficient markets since the assets are sold for cash
High level of domain knowledge, expertise
Improvement in process/ systems
26
Challenges for Real Estate PE Funds
29
Investment Process & Monitoring
Financial Evaluation
Market Study & Analysis
Deal Sourcing
Preliminary Due-diligence
Detailed
Due-diligence
Documentation & Disbursement
Negotiation of Terms
25
Estimated Employment by PE Firms
The PE industry will require a large pool of high caliber professionals
Source: Preqin – Private Equity Spotlight
30
PF II Raised
Invested in 8 (eight) projects across India & Sri Lanka
2012
Pragnya Group
(The Growth Story)
First Investment in L&T Tech Park, Kochi from PF 1
2006-11
Investments by Principals
2006
2003
4
Pragnya Group – Major Investments
Rajahmundry
Bangalore
Pragnya Fund has till date invested in 8 (eight) projects across the country to deliver a total Built Up Area (BUA) of over 13 million Sqft
32
L&T South City - Chennai
L&T Tech Park - Kochi
Bridge County, Rajahmundry
Habitat Crest, Bangalore
VGN Hazel, Chennai
Platinum 1, Colombo
Genexx Heights, Barrackpore
Genexx Exotica, Asansol
1