Bangalore-based real estate developer Vaishnavi Infrastructures has received an investment of $25 million from private equity investor Actis for its Rs 350 crore Bangalore project, an investment bank official said.
The proceeds of the investment will fund the construction and development of approximately 925,000 square feet of high-end residential and retail space at Yeshwantpur, a Bangalore suburb.
This is the first investment by Actis India Real Estate Fund, a $300 million fund sponsored by Actis.
“Actis has taken a significant minority stake in Vaishnavi’s Bangalore project as it is situated at the perfect location. With current realty market conditions … private equity players prefer to invest in projects as they can get the right valuations,” T R Srinivas, director at o3 Capital told DNA Money from his Bangalore office.
Srinivas added that, for further funding, Vaishnavi would take the “debt route” rather than sell more stake in the project.
With the current turmoil in the real estate market, it is becoming increasingly difficult for realtors to raise debt from banks. Industry experts believe many developers are paying interest of around 30% for new loans.
To address the problem, developers are hunting private equity investors to sell stake in their projects.
Recently, the New Delhi-based Unitech said it would sell a 50% stake in the first phase of its Mumbai project (near Bandra-Kurla complex) to Lehman Brothers for $175 million.
However, another Delhi-based developer Parsvnath Developers said it has no liquidity issues for its current project.
“I have Rs 300 crore in fixed deposits and over Rs 500 crore is unutilised and sanctioned debts available with us. I do not see any liquidity issues and am in a comfortable position,”
Parsvnath’s chairman Pradeep Jain said. He added that the average cost of the funding is around 12% for Parsvnath.
Source: DNA India