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Private equity (PE) firm Red Fort Capital says it will stay focussed on real estate. The firm, which has more than $1 billion under management and has invested in over 20 projects in India, has so far returned over $100 million to its investors. Its investments include Parsvnath, 3C Company and Lotus Green. In an interview to Business Line, Parry Singh, Managing Director, spoke about how, for PE firms, realty as an asset class can still be profitable.
Edited excerpts:
Your company has been making systematic investments in residential projects in the National Capital Region. What is the reason for choosing this region?
We make our investments based on predicted returns. NCR has good potential, in the sense that there is demand and infrastructure to match that growth.
We didn’t make any investments in NCR till 2008. But once the prices started correcting, consumer interest returned. We then saw an opportunity to invest in emerging corridors.
PEs seem to be wary of investing in real estate. Does that mean realty is no longer an attractive proposition?
It is true several PEs have exited real estate. At the peak of the real estate boom, there were 184 PE funds.
Now, there are only a handful. Most funds exited as returns on investment were not up to their expectations.
Also, the risk perception on India is high due to uncertainties regarding policies and the macro-economic condition.
NCR, however, is back on the radar of most PE funds due to the high interest of both end-consumers and investors.
Was your return on investments on expected lines, and which new investment pockets are you looking at?
Twenty-five per cent RoI is what we normally target. Not to say that we have made that much in all our exits. In some, we may have exceeded our expectations, while in others, we may have not have had favourable returns.
Mumbai and Bangalore are high on our radar for the reason that growth matches infrastructure development.
What has been the quantum of your investment in real estate so far?
We have made an investment of over $1 billion in realty projects. We are looking to raise a new fund and are in talks with global investors, but I can’t disclose the details.
The firm's global institutional investors include sovereign wealth funds, pension funds and insurance companies.
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