Launch of 2nd real estate fund by Essel Finance

Essel Financial Advisors and Managers (EFAM), the private equity arm of Essel Finance, launched its second real estate fund with a target of raising upto Rs.250 crore. The real estate fund will be invested in various residential projects across cities such as Delhi NCR, Mumbai, Chennai, Bengaluru and Pune. In a statement, the company has added that it will target 6-8 transactions.

CEO – Private Equity Abhinav Bhushan said, “Current market is an opportune time for investment in a debt fund like ours as we have locked in deals at attractive rates and the interest rates are witnessing a downward pressure.”

The fund will have a four year tenor and have set a target of 21.5% internal rate of return from its investments. Considering the firm anticipates maximum demand from the mid and affordable residential segment, the fund will focus on these segments due to its capacity to offer steady returns during downward phases.

The real estate fund has received the required approval from the concerned authorities and has been set up as SEBI Registered AIF category II fund.

Bankers court Lodha for Rs 2,500-crore IPO

After four years of dropping its plan to go public, now again Lodha Group, which is country’s largest real estate developer in terms of sales is going to use the idea of launching an initial public offering (IPO) of equity to rise between Rs 2,500 crore and Rs 3,000 crore for the development of the new projects.

As per the reports and bankers¸ the firm is ready with its own proposals from investment bankers to mandate its IPO and it is expected that it would give at least four of the latter. Currently, Lodha Group is building country’s tallest residential building and due to that Lodha Group aims to rise between Rs 2,500 crore and Rs 3,000 crore through IPO source and it is similar which Lodha Group has sought to do in the year 2010. “At pint of time, we have no comment and we do not react to market speculation”, as per statement of the spokesperson of the Lodha Group. According to sources, the buoyancy in the primary market this year and the ‘top realty developer’ tag had prompted Lodha’s IPO plan.

According to reports, the firm promoter is Bharatiya Janata Party legislator Mangal Prabhat Lodha and earlier in the year 2015, it overtook Delhi-based DLF as the country’s largest realtor in revenues, as the sales of Lodha Group was about 7,800 crore for the year 2014-15, whereas; the sales of DLF was about Rs 7,648 crore for the same duration. In current, financial year, Lodha’s sales target is Rs 10,000 crore and deliveries 7,000 units even after the separation from the group of Brother Abhishek Lodha got the flagship real estate business. However; the Abhinandan Lodha¸ the younger sibling set up a financial services company.

It is expected that this new revival the city’s real estate market will help the group as Lodha group predominantly has projects in the Mumbai city as well as its suburbs. According to the reports of property consultant JLL (Jones Lang LaSalle), home sales in Mumbai has risen by more than 28 percent between the fourth quarter of 2014 and the third quarter of 2015. However; it’s true that in past few years only few realty IPOs have come to the market and these years, investment bankers are saying that there is appetite among investors for this big, strong and high-growth firms. Whereas; the 18 firms from as diverse regions, which range from infrastructure to media have come up in the primary market to raise money with the help of IPOs and real estate has stayed away, because it was only Paranjape Schemes Construction which has filed a draft offer document with SEBI (Securities and Exchange Board of India) with an aim to release its IPO.

According to Sharad Mittal, Head and Director of Real estate funds at Motilal Oswal brokerage, “The primary market is not ready for real estate IPOs. The more he added that there are many actual and perceived issues about these companies, which has impacted investor sentiment. However; in under-performance market there are several market leaders who have made it unsuitable for new players which are in planning to come and raise funds through IPOs. “It seems that Indian market is perceived to be hostile for the IPOs of realty companies, however; a big brand such as; Lodha has decent track record  as it is seeing demand from institutional investors, as per the statement of one of the investment banker.