APG reinforces commitment to Indian real estate with residential deal
02 Jul 2012
GLOBAL - APG has reinforced its commitment to the Indian real estate market, entering into a residential investment deal with the property development arm of India's Godrej Group soon after taking a stake in the Lemon Tree Hotels group.
Godrej Properties (GPL) said it created a residential development platform with €190m of equity commitments comprising a group of global investors led by APG, and including global fund-of-funds Sparinvest Property Fund II.
The platform will focus mainly on developing mid-income residential projects in Mumbai, the NCR (National Capital Region) and Bangalore, with possible opportunistic investments in Pune and Chennai.
Initial commitments will be shouldered by GPL and the investor group respectively in the ratio of 29:71, it said.
Sachin Doshi, senior portfolio manager at APG in Hong Kong, said: "We are looking forward to this relationship with Godrej Properties to invest in the mid-income residential segment in India's tier-1 cities.
"In our view, these cities will continue to be long-term beneficiaries of India's urbanisation trends and also represent the deepest pools of residential demand in the country.
"We particularly like Godrej Properties' capital-efficient strategy and the strong brand affinity it enjoys with its customers and stakeholders."
The Indian deal comes hot on the heels of APG's recent move to take a stake in Delhi-based group Lemon Tree Hotels, and set up the Fleur Hotels Private joint venture with it.
GPL said the parties aim to expand the platform as the right opportunities emerge.
GPL will be the exclusive development manager of projects pursued by the platform, and will receive a development management fee for this.
The fund would allow GPL to secure outright land purchase transactions in what it described as currently dislocated market conditions, without deviating from its 'asset light' model, it said.
Pirojsha Godrej, managing director and chief executive at GPL, said: "This is an important growth opportunity for GPL that will allow us to extend the number of projects in our portfolio while maintaining our capital-efficient land sourcing strategy."
Macquarie Capital (India) Private acted as the sole financial adviser for the deal.
Author: Rachel Fixsen