Chinese investors seem to be opening up their purse strings to pump in big bucks in Indian markets. Business conglomerate Fosun is said to be in the process of setting up a real estate focused platform in India that would invest as much as $1 billion through equity transactions.
The Economic Times, citing two unnamed sources, reported that the platform is roping in Apurva Muthalia, chief executive officer of Aditya Birla Real Estate Fund, as the head of India venture. It added that the platform would operate like other global investors such as Singapore’s sovereign wealth fund GIC that picks up stakes in projects besides backing private equity funds as limited partners.
"This is similar to what large investors like GIC do. They put money in other funds and also make investments on their own when an opportunity arises. Fosun will have a similar play here. They are already looking at buying an asset in Mumbai," the report quoted a source.
The platform will initially lap up income producing rental assets and then set up a construction arm to develop large projects. “It will also buy some development assets in the top cities that will be developed later when they set up a construction arm here to build large projects," it quoted another source.
Commercial real estate has been a favourite among global investors given the rental income and appreciation it offers. Private equity giant Blackstone has gradually built a large portfolio of income generating assets and stands as one of the biggest owners of office space in India along with DLF.
Developers, who have been sitting on a large stock of commercial properties are now exploring the private REITs market to monetise their assets as the public REITs market seems to be marred by tax and regulatory complexities.
Meanwhile, the diversified business group is also in talks with private equity firms such as Rising Straits Capital to back their funds as a limited partner, according to the report. Limited partners (LPs) are investors who pool in money for private equity funds managed by general partners (GPs).
The focus of Fosun to tap long-term opportunities in Indian real estate market comes at a time when several global investors have either ramped up their play or added Indian realty landscape to their investment mandate. In fact, the capital flow had touched a seven-year high of $2.8 billion in equity in 2015 on the back of strong momentum from global investors especially sovereign and pension funds, according to VCCEdge, the research platform of News Corp VCCircle.
The plan of the Chinese investor is also in line with its peers who have invested more than $2.3 billion across four companies in the last three months—this is twice the money they had invested in the country in the last decade-and-a-half, VCCEdge data show.
Fosun’s pharmaceutical group company recently struck a big-ticket transaction by buying KKR-backed Gland Pharma for $1261 million.
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