Warburg to spend $ 250 mn as Indian property booms

Hong Kong, Jan 17: US private equity firm Warburg Pincus [WP.UL] has earmarked 0 million for Indian property at a time when developers are scurrying to launch IPOs and attract foreign partners to further fuel a building spree.

Since India eased rules on inward investment in its construction industry in early 2005, the country has been swept up in property mania.

Prices for some prime plots of land have doubled as developers catch up on half a century of near inactivity to build homes, offices and shopping centres fitting for an economy growing at around 9 percent a year.

The boom has drawn Warburg Pincus, which has already invested in a fledgling hotel business, as well as other private equity property funds run by the likes of Morgan Stanley , JPMorgan and Merrill Lynch .

Philip Mintz, head of Warburg Pincus's Asia property practice, said he was on the lookout for more partners, in any type of property development, with ''somewhere near 0 million over two to three years'' on the table.

''We'd like to find a partner that shares the same vision, whether they're exceptional in retail, residential, warehouses or offices,'' Mintz said in an interview in his glass-walled office, 67 storeys above Hong Kong's harbour.

Warburg Pincus would also consider taking an equity stake or investing in individual projects -- ''We're agnostic on structure,'' Mintz said. ''We try to buy management teams.'' In a market where developers are only just beginning to expand from their regional bases, picking a partner capable of becoming a national giant is difficult but potentially lucrative.

The task is complicated by the emergence of a raft of new developers, as the property boom lures a mixed bag of companies that own some land, from financial service providers to hand-rolled cigarette makers.

RISK Mintz said many foreign investors were ignoring the risks of property investment in India and China, where Warburg is also spending 25 to 30 percent of a .2 billion fund closed in October.

In India, infamous for its red tape, investors had to grapple with issues such as squatter rights and disputed titles, he said.

''These are still newly emerging markets. But the risk premia have narrowed considerably,'' Mintz said, adding that rental yields at business park premises had dropped to around 8.5 percent from 12 percent in the last two years.

The soaring property market has complicated valuations of developers, many of whom expect a similar price trajectory in future, and some foreign private equity investors have complained Indian firms overprice themselves.

Eyebrows were raised when DLF Universal Ltd., which built the New Delhi suburb of Gurgaon, valued itself at around billion when it made its first attempt to launch an IPO last year.

Concerns over valuation and a stock market dip led to a postponement of the share sale, but DLF revived its listing plan this month, cutting the IPO size to Hong Kong, Jan 17: US private equity firm Warburg Pincus [WP.UL] has earmarked $250 million for Indian property at a time when developers are scurrying to launch IPOs and attract foreign partners to further fuel a building spree.

Since India eased rules on inward investment in its construction industry in early 2005, the country has been swept up in property mania.

Prices for some prime plots of land have doubled as developers catch up on half a century of near inactivity to build homes, offices and shopping centres fitting for an economy growing at around 9 percent a year.

The boom has drawn Warburg Pincus, which has already invested in a fledgling hotel business, as well as other private equity property funds run by the likes of Morgan Stanley , JPMorgan and Merrill Lynch .

Philip Mintz, head of Warburg Pincus's Asia property practice, said he was on the lookout for more partners, in any type of property development, with ''somewhere near $250 million over two to three years'' on the table.

''We'd like to find a partner that shares the same vision, whether they're exceptional in retail, residential, warehouses or offices,'' Mintz said in an interview in his glass-walled office, 67 storeys above Hong Kong's harbour.

Warburg Pincus would also consider taking an equity stake or investing in individual projects -- ''We're agnostic on structure,'' Mintz said. ''We try to buy management teams.'' In a market where developers are only just beginning to expand from their regional bases, picking a partner capable of becoming a national giant is difficult but potentially lucrative.

The task is complicated by the emergence of a raft of new developers, as the property boom lures a mixed bag of companies that own some land, from financial service providers to hand-rolled cigarette makers.

RISK Mintz said many foreign investors were ignoring the risks of property investment in India and China, where Warburg is also spending 25 to 30 percent of a $1.2 billion fund closed in October.

In India, infamous for its red tape, investors had to grapple with issues such as squatter rights and disputed titles, he said.

''These are still newly emerging markets. But the risk premia have narrowed considerably,'' Mintz said, adding that rental yields at business park premises had dropped to around 8.5 percent from 12 percent in the last two years.

The soaring property market has complicated valuations of developers, many of whom expect a similar price trajectory in future, and some foreign private equity investors have complained Indian firms overprice themselves.

Eyebrows were raised when DLF Universal Ltd., which built the New Delhi suburb of Gurgaon, valued itself at around $27 billion when it made its first attempt to launch an IPO last year.

Concerns over valuation and a stock market dip led to a postponement of the share sale, but DLF revived its listing plan this month, cutting the IPO size to $2 billion from $3.5 billion, which would value the firm at about $20 billion.

The move follows successful Mumbai IPOs by Parsvnanth Developers Ltd. and Sobha Developers Ltd. in late 2006.

With foreign investor enthusiasm for Indian property on the rise, London's secondary Alternative Investment Market has become a popular listing arena for Indian developers, with Dev Property Development Plc's planned $530 million IPO the latest offering.

REUTERS billion from .5 billion, which would value the firm at about billion.

The move follows successful Mumbai IPOs by Parsvnanth Developers Ltd. and Sobha Developers Ltd. in late 2006.

With foreign investor enthusiasm for Indian property on the rise, London's secondary Alternative Investment Market has become a popular listing arena for Indian developers, with Dev Property Development Plc's planned 0 million IPO the latest offering.

REUTERS