Morgan Stanley invests INRs 675cr in Oberoi Construction of India.
Source Times of India:
- In the single largest FDI in the country’s booming real estate sector, Morgan Stanley has invested $152 million (Rs 675 crore) in a city-based firm, Oberoi Construction.
- The world’s largest private equity realty fund, which manages $100 billion (one-seventh of India’s GDP), will in return get a 10% stake in the three-decade-old unlisted company which has a land bank of 15 million sq/ft, most of it in western suburbs of the city. The deal has valued Oberoi at Rs 6,750 crore.
- Anand B Madduri, an ED at Morgan Stanley, said the three drivers that attracted the fund were the property developer’s execution of projects, entrepreneurial vision of promoter and delivering housing and commercial establishments to a community.
- Oberoi said the money can be leveraged to raise around Rs 2,500 crore of debt for speedy execution of projects that will give him a cash flow of $1b in 3-4 years.
- The scramble for buying assets was evident recently when three prominent real estate companies-Hirandani Constructions, Rahejas and Unitech raised close to $2.3 bilion from the London market.
- Last year, US’s Farallon Investments along with LN Mittal had invested close to Rs 1,429 crore in four real estate companies of IndianBulls, a financial services firm which diversified into property development.
- Ten Indian real estate companies have raised money by selling shares to the public, which eagerly lapped up the issues.
- Industry sources say around 150 foreign PE have lined up nearly $10 billion to invest in real estate in the next two years as government relaxes norms to ramp up the country’s inadequate infrastructure. Indian and multinational institutions such as J P Morgan, Falcon, 3i, Blackstone, Carlyle, Kotak Real Estate, IL&FS, ICICI and HDFC are some of them who are waiting to storm the sector.
- ICICI Realty fund is learnt to be raising $1 billion and Kotak Mahindra $500 million.
Seems like more investment is on its way. This will lead to price hikes and beyond reach to even think of buying a house for a normal person. Are these price hikes justified? Is this organic growth or hyped? Is it in any way benefiting the common man of India?