Realty to see up to US$5bn PE exits in 2012: JLL

The period between 2005 and 2008 saw a number of institutional investments by both domestic and international funds into Indian real estate

Jones Lang LaSalle has released a report entitled 'Reaping the Returns - Decoding Private Equity Real Estate Exits in India'. The report was unveiled during an exclusive media interaction during which the trend of successful PE exits in Indian real estate was discussed in detail.

PE investments in Indian real estate have penetrated deep into the industry, with both domestic and foreign funds fuelling the rapid growth of real estate construction in Indian cities. The opening up of the real estate (RE) sector for Foreign Direct Investment (FDI) in 2005 resulted in transformation of the investment sentiment in the country.

“The period between 2005 and 2008 saw a number of institutional investments by both domestic and international funds into Indian real estate,” said Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India. “Most of these PE funds were calibrated to fund cycles between 5 to 7 years, which is more or less the typical inception-to-completion-cycle of a project. We are now at a stage where many of these private equity funds are monetizing their investments. This constitutes the exit phase, and the pivotal concept here is successful, optimally profitable exits.”

Private equity funds are expected to exit between $3 bn and $5 bn worth of Indian real estate investments in 2012, Jones Lang LaSalle reportedly said.

The first round of fund-raising after 2005 took place on the basis of India's macro-economic growth story in a world operating differently from before the global financial crisis. Many of the blue-chip global real estate investors then have shut offices now and many smaller, home-grown investors have become key investors in this market. The ability to successfully recover invested capital and returns will differentiate the fund managers in the next round of fund raising and also bring the spotlight on ‘investment grade’ developers.

“As advisors to domestic, foreign and listed private equity funds, lenders and developers, Jones Lang LaSalle India has successfully engineered a number of private equity exits,” says Sanjay Dutt, CEO – Business, Jones Lang LaSalle India. “This report attempts to summarize what we consider the winning strategies in the field, based on our dealings with various industry stakeholders in the industry. ”This is the right time to examine the experience of various stakeholders in the real estate private equity industry, identify the track record and chart the direction this sector is headed in.”

The report 'Reaping the Returns - Decoding Private Equity Real Estate Exits in India' aims to gain and share a perspective on a PE fund’s exit proposition in context with the Indian real estate industry. This thought piece touches upon the Who, Where, When, Why and How of the investment and exit strategies of the PE funds as empirically observed over the last 6 years.

Source: http://www.indiainfoline.com/Markets/News/Realty-to-see-up-to-US-dollar-5bn-PE-exits-in-2012-JLL/5317057130