According to a senior official of the IL and FS backed QVC, it plans to use a portion of the funds, Rs 200 crore, for the development of its Rs 2,000 crore township project in Gurgaon. Delhi-based Uppal Group is a partner in this project.

“We will need funds to acquire land in the southern metros. We propose to acquire about 100 acres each in Bangalore and Hyderabad, close to the new airports in these cities, because we believe that both cities will grow in the direction of the airports. We will require funds to develop current projects,” said QVC’s promoter Prakash Gurbaxani.

According to Mr Gurbaxani, IL and FS is likely to invest up to Rs 400 crore in the company giving it the option to raise debt or bring on board a strategic investor into the SPV implementing the Gurgaon township. IL and FS has already invested $100 million into QVC in April, 2007.

QVC Realty, has six projects under various stages of development: integrated township projects in Gurgaon and Pune, apart from stand alone developments in Pune, Bangalore and Chikmagalur in Karnataka totaling about 20 million square feet.

The company has also partnered with Bangalore’s Sobha Developers and New Delhi’s Chintels India for its second township project in Gurgaon.

The company formally launched its Rs 150 crore Bangalore residential project – QVC Hills. It will construct 100 premium villas, priced upwards of Rs 5,500 per square feet, on a 26-acre plot located in close proximity to the Devanahalli airport.

Plans include developing an additional 50 acres in the coming years, investing additional Rs 250 crore, Mr Gurbaxani said.

Alok Infrastructure’s SPV, which is receiving the JP Morgan funding, will develop a realty project at a prime location in Mumbai. Alok Infra owns land at several prime locations in Mumbai, some of which it bought in high-profile transactions in the past one year. Alok Infrastructure had been in negotiations with some private equity players to offload equity in the main company.

A falling stock market and a sluggish realty sector of late has, however, brought down the valuation of realty firms forcing Alok Infra, as many other realty companies, to go for investment at the project or SPV level. Alok Infra may be looking at raising more funds through private equity route for its different projects.

The company’s biggest project under execution is the 180-acre textile SEZ at Silvassa in the union territory of Dadra & Nagar Haveli. The SEZ obtained the government’s formal approval last December. Parent Alok Industries plans to occupy one-fifth of the SEZ space for its textile and apparel units. The company is also in talks with other textile makers for space in the SEZ.

Earlier this year, Alok Infrastructure acquired 50% stake in Ashford Infotech, which would develop a million sq ft of space for Rs 400 crore. Ashford Infotech, now equally owned by Alok Infra and Ashford group, had earlier purchased a 6.92-acre plot from CEAT in a Mumbai suburb for Rs 130 crore.

Alok Industries reported a net sales of Rs 2159 crore and net profit of Rs 200 crore for the year 2007-08. Alok exports its range of textile products to as many as 58 countries, which contributes nearly half of the company’s sales. The company has been present across all textile segments, including spinning, weaving, knitting, fabric, garment and home textile.

Lately, the company has moved up the value chain and is increasingly strengthening its presence in retail in India as well the UK. The company retails its products under H&A brand name targeted towards the mass market. The retail division is being hived off as a separate wholly-owned subsidiary by the name Alok Homes and Apparel.

The market for loan securitization was Rs 31,000 crore, of which real estate loan securitization accounted for 20% of the total market as on March 2008. Both ICICI bank and the State Bank of India refused to comment.

It is allowed to a bank or a NBFC to sell the loan as a securitized paper. Mutual funds are the major buyers of these papers, return on which is linked to the rating of the loan. Following the securitization, loan disappears from the balance sheet of the banks or NBFCs, who in turn communicate to the borrowers that their loan has been sold to an investor.

From borrower’s point of view, it could mean lesser disclosure. Borrowers then keep repaying to the Special Purpose Vehicle (SPV) where such paper is parked instead of the bank or NBFC. Banks make good the spreads between lending at a certain tenor to selling the loan for a higher yield. Rajiv Shastri, Lotus MF said, “We have been very wary about these loans from the very beginning, primarily because they didn’t offer high asset cover-age. Most papers floating in the market offered one-and-a-half times asset coverage, which is nothing if prices start falling. Last November-December, we just took two papers, which offered us a coverage of 3-4 times”.

Debt funds from the houses of Reliance, DWS and HSBC have been fairly aggressive in buying real estate loans. Reliance MF CEO Vikrant Gugnani said, “We are more cautious in today’s conditions like anyone else. We have always been conservative in our investment policy and we remain so”.

BNP Paribas Chief Investment Officer (CIO) Mr. Ram Kumar said, “If it is a loan taken by a big realty company, the rating will be higher and there are more buyers for such papers. But we treat these investments like any other paper, although they are illiquid. We do not invest in them anymore. We did, two years go”. Many other fund managers too have changed their stance now.

For over two years now, the RBI has raised the risk weight for commercial real estate loans to 150% in addition to issuing guidelines on multiple occasions to banks to limit their exposures to the sector. Nevertheless, real estate loans form only a small part of most banks’ balance sheets, thus allowing them to continue financing real estate assets.

Emaar MGF was enforced to withdraw its seven thousand crore rupees offering, due to poor market response. Poor market response has also enforced DLF, Unitech and Indiabulls to suspend the Singapore listing of their real estate investment trusts. Though the flow of funds into the real estate sector has not stopped, developers are not ready to go in for equity dilution at the parent company level fearing lower valuations. This has encouraged most companies to look for private equity funding at project or SPV level.