Is leverage / mezzanine funding a double edged sword in project financing?
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b) Principal: invested real estate or infrastructure companies with capital at risk.
The fine art of portfolio balance: What really drives the real estate landscape in India today?
GRI Club India members met over a breakfast hosted by GRI Club Partner PwC recently in Mumbai to debate the challenges faced by developers and financiers in the Indian residential sector. The high-spirited discussions centred on evolving business models, single asset vs multi-asset class investment strategies and whether the residential market is in need of a revival.
A summary of the discussion points:
Participants discussed how developers are now largely funded by debt which, from the financiers’ point of view, has resulted in an asset-liability mismatch.
Asset-liability mismatches, as was observed,is not a new phenomenon: in the late 1990s, resulted in a crisis amongst non-banking financial companies (NBFCs) and created liquidity challenges for other financiers holding investments in real estate assets.
In terms of M&A activity within the sector, it was noted that there has been a shift towards consolidation, the sale of portfolios and merger deals, although some M&A deals are being drawn out and taking time to complete.
A change in the market has been noticed, with an increase in risks that is affecting the level of equity funding required to acquire assets and the risks valuation metrics have also changed, with an expected decline in future multiples. Participants concluded that funding frameworks had shifted to a new paradigm and that going forward, it was necessary to understand exactly what was the ‘new normal’.
Key executives who are part of GRI community attended the meeting, on behalf of investment banks and funds, advisors, operators and developers, such as Anita Kataria (Raheja Universal), Hari Krishna V (CPPIB - India), Manoj Menda (RMZ Corp), Aditya Chandak (Chandak Group), Sanjay Hinduja (Shapoorji Pallonji Finance), Abdullah Rashed Jasem Al Abdooli (Al Marjan Island), Pradeep Khanna (Reliance Nippon Life Asset Mgmt), and Kaushik Desai (Walton Street).
Wednesday, February 27th
9:00 am to 10:00 am | Registrations and Breakfast Networking
10:00 am to 11:00 am | Discussions
11:00 am to 11:30 am | Coffee Networking
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