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Loan scam may spur private equity funding in real estate

Moumita Bakshi Chatterjee The Hindu Business Line
A file picture of unfinished real estate projects in Hyderabad.

A file picture of unfinished real estate projects in Hyderabad.

With the ‘bribe-for-loan' scam casting a shadow over builders' access to bank lending, real estate funds and private equity (PE) players now sense a business opportunity.

They are actively scouting the deal street for bargains, hoping that the loan scam will put more equity transactions on the table and prompt “realistic” valuations in deal signing.

Real estate private equity fund Red Fort Capital says it plans to be aggressive and step up investment activities in India, as more and more developers eye the PE route for funding projects in coming months. Another realty fund, Fire Capital, is rolling up its sleeves to deploy nearly $100 million into the real estate market, and expects to snap up 5-10 deals in the next one year.

“The main sources of capital for real estate industry are bank funding and capital markets. With those two options now seen slowing down, it is inevitable that they will look more towards PE for funding,” Mr Subhash Bedi, Managing Director of Red Fort Capital, said.

“We are known to be bullish on the real estate sector. So as a result, when others become more cautious , we get more aggressive in funding. In this market, we are stepping up our investment activities,” Mr Bedi pointed out.


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