Amrapali in funding talks with PE firms

Realty firm Amrapali Group is in the process of raising about Rs.220 crore from private equity (PE) firms to fund the construction of two of its large residential projects in Noida. The Noida-based developer is raising Rs.100 crore from IL&FS Investment Managers Ltd for its 20-acre Princely Estate mid-segment apartment project. From JPMorgan Chase & Co., it is raising about Rs.120 crore for its 60-acre Silicon Valley project. JPMorgan had invested Rs.75 crore in the firm's Zodiac project in Noida in 2010. “Bank lending is a little difficult and time-consuming if you want a higher sum of capital, and then we have to look at alternative sources such as PE funds,” said Anil Sharma, chairman and managing director, Amrapali Group. “A single bank won't lend a large sum and arranging a consortium of banks takes time.” Sharma said Amrapali is raising money primarily to complete the two Noida projects in time; the projects are due for delivery to buyers in 2013. “If you want to target completion on time, particularly for large projects, you need strong financial backing,” he said. In an email reply, JPMorgan declined to comment on the matter. IL&FS said in an email its spokespeople were unavailable for comment. In 2011 till date, PE funds have invested $1.079 billion (Rs.5,680 crore) across 30 deals in India's real estate sector, compared with $1.096 billion across 35 deals in 2010, according to VCC Edge, which tracks investments. Property analysts say there is a huge need for capital for realty projects in Noida, which has witnessed a substantial slowdown in residential sales in recent months as well as in internal accruals from customer advances, essential in funding construction. This year, because of the controversy over land acquisition for realty projects in the Greater Noida Extension area, construction was stopped in many projects and at least 1,00,000 homebuyers were affected as farmers agitated for higher compensation. The compensation process has started and developers have to bear the additional expenses. Property prices have also risen by Rs.500-600 a sq.ft in the recent past. “There is a huge number of upcoming projects in Noida and many developers there are raising money due to the slow sales velocity in recent months,” said Amit Goenka, national director–capital transactions, Knight Frank India, a property advisory. source: http://www.livemint.com/2011/12/21224613/Amrapali-in-funding-talks-with.html?atype=tp