Apollo fund to pour $ 2 bn into Indian property

By Staff
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Google Oneindia News

Hong Kong, Jan 25: US private equity firm Apollo Management will pour around Hong Kong, Jan 25: US private equity firm Apollo Management will pour around $2 billion into Indian real estate, having raised one of the biggest funds yet for a sector that has been buzzing since rules on inward investment were eased two years ago.

Hooking up with India's Sun Group, Apollo has raised $630 million in equity from institutional investors, pension funds in particular, for a fund that will see its spending power magnified three-fold by borrowing.

India represents a first foray into Asia for Apollo's property investment arm, which has raised $6.6 billion of equity for the U.S. and European markets since 1993.

Bill Benjamin, who heads Apollo Real Estate Advisors for the European and India markets, told Reuters the fund would consider joint ventures with local partners to build any type of property because of demand in an economy growing at 9 percent a year.

''There's a 20 million (unit) shortage in housing, according to the government, and 90 million square feet of office space is a drop in the ocean compared to the needs of the economy,'' he said. ''And anyone who has tried to book a room in a tier one or tier two city knows there's very little hotel capacity.'' In India, the fund was aiming to keep up Apollo's record of 20 percent or more compound annual return, Benjamin said, although individual projects could generate internal rates of return as high as 30 percent.

That scale of profit has drawn several big-name property funds to India, including those run by U.S. banks Morgan Stanley , Merrill Lynch and JPMorgan .

Even before Apollo raised the fund, analysts were saying foreign investors had earmarked a cumulative $2 billion per year for Indian property investment.

While most foreign investors want to dip their toes into the market by investing in individual projects, Morgan Stanley has preferred to take stakes in local developers with ambitions to break out of their regional bases to become national giants.

Several developers have launched initial public offerings in the last few months to fund expansion, including Parsvnanth Developers Ltd and Sobha Developers Ltd. .

Apollo began a joint venture to develop business park, retail and residential property in Chennai, and that project will be injected into the fund.

Benjamin said he was looking for other projects in ''tier one and tier two cities''. But he is wary of land prices, which have doubled in some areas in the past two years.

''In extremely supply-constrained markets such as Mumbai and New Delhi, land has shot up,'' Benjamin said. ''We're looking at transactions where land prices, although higher than a few years ago, are still cheap on a global basis,'' he said.


Reuters billion into Indian real estate, having raised one of the biggest funds yet for a sector that has been buzzing since rules on inward investment were eased two years ago.

Hooking up with India's Sun Group, Apollo has raised 0 million in equity from institutional investors, pension funds in particular, for a fund that will see its spending power magnified three-fold by borrowing.

India represents a first foray into Asia for Apollo's property investment arm, which has raised .6 billion of equity for the U.S. and European markets since 1993.

Bill Benjamin, who heads Apollo Real Estate Advisors for the European and India markets, told Reuters the fund would consider joint ventures with local partners to build any type of property because of demand in an economy growing at 9 percent a year.

''There's a 20 million (unit) shortage in housing, according to the government, and 90 million square feet of office space is a drop in the ocean compared to the needs of the economy,'' he said. ''And anyone who has tried to book a room in a tier one or tier two city knows there's very little hotel capacity.'' In India, the fund was aiming to keep up Apollo's record of 20 percent or more compound annual return, Benjamin said, although individual projects could generate internal rates of return as high as 30 percent.

That scale of profit has drawn several big-name property funds to India, including those run by U.S. banks Morgan Stanley , Merrill Lynch and JPMorgan .

Even before Apollo raised the fund, analysts were saying foreign investors had earmarked a cumulative Hong Kong, Jan 25: US private equity firm Apollo Management will pour around $2 billion into Indian real estate, having raised one of the biggest funds yet for a sector that has been buzzing since rules on inward investment were eased two years ago.

Hooking up with India's Sun Group, Apollo has raised $630 million in equity from institutional investors, pension funds in particular, for a fund that will see its spending power magnified three-fold by borrowing.

India represents a first foray into Asia for Apollo's property investment arm, which has raised $6.6 billion of equity for the U.S. and European markets since 1993.

Bill Benjamin, who heads Apollo Real Estate Advisors for the European and India markets, told Reuters the fund would consider joint ventures with local partners to build any type of property because of demand in an economy growing at 9 percent a year.

''There's a 20 million (unit) shortage in housing, according to the government, and 90 million square feet of office space is a drop in the ocean compared to the needs of the economy,'' he said. ''And anyone who has tried to book a room in a tier one or tier two city knows there's very little hotel capacity.'' In India, the fund was aiming to keep up Apollo's record of 20 percent or more compound annual return, Benjamin said, although individual projects could generate internal rates of return as high as 30 percent.

That scale of profit has drawn several big-name property funds to India, including those run by U.S. banks Morgan Stanley , Merrill Lynch and JPMorgan .

Even before Apollo raised the fund, analysts were saying foreign investors had earmarked a cumulative $2 billion per year for Indian property investment.

While most foreign investors want to dip their toes into the market by investing in individual projects, Morgan Stanley has preferred to take stakes in local developers with ambitions to break out of their regional bases to become national giants.

Several developers have launched initial public offerings in the last few months to fund expansion, including Parsvnanth Developers Ltd and Sobha Developers Ltd. .

Apollo began a joint venture to develop business park, retail and residential property in Chennai, and that project will be injected into the fund.

Benjamin said he was looking for other projects in ''tier one and tier two cities''. But he is wary of land prices, which have doubled in some areas in the past two years.

''In extremely supply-constrained markets such as Mumbai and New Delhi, land has shot up,'' Benjamin said. ''We're looking at transactions where land prices, although higher than a few years ago, are still cheap on a global basis,'' he said.


Reuters billion per year for Indian property investment.

While most foreign investors want to dip their toes into the market by investing in individual projects, Morgan Stanley has preferred to take stakes in local developers with ambitions to break out of their regional bases to become national giants.

Several developers have launched initial public offerings in the last few months to fund expansion, including Parsvnanth Developers Ltd and Sobha Developers Ltd. .

Apollo began a joint venture to develop business park, retail and residential property in Chennai, and that project will be injected into the fund.

Benjamin said he was looking for other projects in ''tier one and tier two cities''. But he is wary of land prices, which have doubled in some areas in the past two years.

''In extremely supply-constrained markets such as Mumbai and New Delhi, land has shot up,'' Benjamin said. ''We're looking at transactions where land prices, although higher than a few years ago, are still cheap on a global basis,'' he said.


Reuters

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