PE funding in Real Estate on a surge

With the loan scam unveiled and access to bank lending being tough, real estate funds and private equity (PE) firms now sense a business opportunity. Hoping that the loan scam will put more transactions on the table, they are actively working for the deal bargains. Bank funding and capital markets are the primary sources of capital in the realty sector and with these slowing down; it is inevitable to use PE for funding with more deals likely to come in their way.

Red Fort Capital, a real estate PE fund says that it plans to be more aggressive and step up investment activities in India, as more developers are looking on private equity for funding their future projects. Fire Capital, another realty fund is planning to deploy nearly $100 million into the real estate market.

The scam-triggered scrutiny of loan disbursements would allow PE players to drive a harder bargain. But despite the bargaining power, it would be safe not to push for terms that are unsustainable and not to do too many deals where execution can then become a challenge. While it is anticipated that any liquidity pressure in the market will provide more opportunities for PE, it may be just too early to decide on how much of it will materialize into actual funding.

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