Global distressed funds go big on Indian realty

LACK OF CREDIT FOR PROPERTY DEVELOPERS

- RAGHAVENDRA KAMATH

DISTRESSED ASSET INVESTORS such as PAG, Oaktree and Varde Partners are capitalising on the current real estate situation in India.

These global investors have poured millions of dollars into the country in recent years, as demonetisation, the crisis in IL&FS and non-banking financial companies have resulted in a lack of credit for property developers in the country. Further, the pandemic aggravated the crisis.

While most of the domestic lenders such as Edelweiss, Indiabulls and others stayed away from lending to real estate in the aftermath of the NBFC crisis and DHFL and Altico Capital went out of business, the opportunistic credit funds saw a big opportunity to lend to cash strapped developers and lent nearly $3 billion to them, experts said.

For instance, PAG, Asia's biggest multi-asset manager, has lent about $1.3 billion to property developers in the last four years, of which 90% was in the last two years, said sources in the know.

Earlier this year, it collaborated with Shapoorji Pallonji Real Estate, Indiabulls Housing Finance and Lokhandwala Kataria Constructions for reviving the stressed Minerva luxury project in South Mumbai. It had lent to Shapoorji Pallonji Real Estate ₹750 crore in 2020.