Even as numbers of private equity deals fell in the later half of April 2008, real estate seemed to suck in whatever was available. Around 78 per cent of the private equity money went into real estate in the period.
For the four months January-April 2008, 33 per cent of private equity money has gone into real estate according to a report by global audit and consulting firm Grant Thornton. Real estate is tailed by power at 17 per cent. Another global firm Dealogic has identified India as the second biggest private equity destination for 2008 in Asia, with Japan in the lead.
The total number of deals in the second half of April was only eight compared to 24 deals in the first fortnight. The slowing down comes after a active period that saw 156 deals being struck in the first four months of 2008, the Grant Thornton report said.
The report further said that realty has been the biggest grosser for private equity deals for four consecutive fortnights.
The biggest deal of the second fortnight of April was $54 million (Rs 216 crore) invested by HDFC Sponsored Funds in Lodha Group. There was only another realty deal out of the eight deals in the fortnight – Blackstone investing $18 million in Synergy Property Development Services.
The Lodha Group has so far raised $600 million in private equity and its latest project is a 2.9-acre luxury township near Hyderabad. For Blackstone this is the second investment in the sector with its earlier investment in realty going to Nagarjuna Construction last year.
In the first four months of 2008 the real estate sector saw 32 private equity deals. IT and ITES followed in the number of deals at 32 deals, but the money coming into IT and ITES is far smaller in comparison.
As a percentage of the total amount invested through private equity deals, IT and ITES account for only $92.59 million, which is 1.87 per cent of the total. The average deal size is also small at $3.7 million (Rs 14 crore). In comparison the average deal size for real estate is $50.9 million (Rs 203 crore).