3i in talks to invest $100 mn in Mantri Developers

UK-based private equity major 3i is in talks with Mantri Developers for investing up to $100 mn. Mantri and 3i have had several rounds of talks and the investment could be routed into a special purpose vehicle (SPV) for a specific project. Mantri Developers has already attracted private equity funding in an earlier round from Morgan Stanley Real Estate Fund for 10% stake for $68 mn, valuing the company at $650-680 mn in early 2006.

Some of the biggest PE transactions in the realty space include TPG-Axon investing $100 mn in DivyaSree Developers, Citigroup Property Investors tying up with Nitesh Estates to invest $100 mn to build the 250-room Ritz Carlton in Bangalore, UK-based Trinity Capital infusing £9.1 mn in Hyderabad-based Manjeera Construction, New York-based Och-Ziff Capital which picked up a 25% stake in Nitesh Estates for $ 51 mn and US-based Samsara Capital investing $32 mn in IDEB Projects.

So far, 3i has made seven direct investments in India, the latest being in Indiareit, the real estate fund of the Piramal Group. In the last 18 months 3i has invested over $200 mn in India, and plans to invest a further $1 bn in Asia over the next three years.

Read more in the article in The Economic Times.

Credit Suisse to raise a $1bn fund to tap Indian realty

Credit Suisse, the Zurich-headquartered financial powerhouse, is planning a dedicated $1 bn fund for investing in the booming real estate sector in India, to be announced in the next financial year. Already, US-based investment banking giants Morgan Stanley and Goldman Sachs have invested heavily in the real estate market in India, with Morgan Stanley Real Estate Fund recently having struck the largest real estate investment deal worth Rs. 675 crores with Mumbai-based Oberoi Constructions. Goldman Sachs is also planning an investment of $1 bn. Credit Suisse’s $1-bn investment in real estate will be brought in a phased manner by 2010 and will focus on commercial space. High on its priority list are large-format retail malls, two-star and three-star business hotels, healthcare and multi-use office-cum-residential complexes. Sources said the fund will primarily pick equity in ongoing big-ticket projects or those looking for second round of funding to complete their partially operational projects. The fund is unlikely to park money in start-up projects. The fund is also keen on acquiring management stake in some projects post-completion.

Read more in The Economic Times.

Oberoi Constructions receives Rs. 675 crores from Morgan Stanley Real Estate Fund

Morgan Stanley Real Estate Fund has invested Rs. 675 crores (approximately $152 mn) in Mumbai-based Oberoi Constructions for an undisclosed stake. The private equity deal is said to be the largest in the Indian real estate sector. Fourteen other funds, including Blackstone, Carlyle, and GE, were in the race to acquire the stake in Oberoi Constructions. Morgan Stanley Real Estate Fund recently invested $67.4 mn in Mantri Developers. The fund looks at a return of more than 30% annually.

The company has projects lined up for Pune, Hyderabad and Bangalore for which it will acquire land. It has interests in both commercial and residential projects. It plans to diversify into shopping malls, hotels, hospitals and education centres. It has ongoing residential and commercial projects in Mumbai’s suburbs – the Oberoi Mall in Goregaon, Oberoi Chambers and Garden Estate in Andheri, among others.

The real estate company has been valued at $1 bn by Kotak Mahindra Capital, the advisors to the deal. Anand Madduri, Executive Director, Morgan Stanley Dean Witter Asia, will be joining the Oberoi Constructions’ board.

The real estate sector is growing at a whopping 35-40% and has seen large private equity deals in the last few months with nearly $350 mn in investments flowing into the sector. Siachen Capital has invested $100 mn in Bangalore-based Nitesh Estates, HDFC Real Estate has invested $35 mn in the Ansals IT City and Parks and another $31 mn in Pune-based developer Vascon Engineers. More than 20 funds are interested in the sector.

Read The Economic Times article for more details.