Calcutta: US-based global investment firm KKR has pumped Rs 180 crore into a mixed-use real estate development in Rajarhat, a rare instance of an internationally renowned private equity player showing the confidence to invest in Calcutta.
KKR (formerly Kohlberg Kravis Roberts) has stumped up the money in Mani Casadona, a predominantly office complex that also has a residential block and some retail space. The transaction took place last week.
A spokesperson for the New York-based firm, which has $191.3 billion in assets under management, confirmed the deal. "We have financed the office building through KKR's real estate-focused non-banking finance company (NBFC)," the official said.
The 13-acre plot in Action Area II has been developed by Magus Bengal Estate LLP. It has a combined built-up space of 1.7 million square feet. Roughly 700,000sq ft of the available space of 1.3 million square feet is already occupied.
Sanjay Jhunjhunwala, CEO of the Mani Group and designated partner of Magus, said the transaction vindicated the quality of the project and the transparency of the business. "We have been able to convince a large US-based PE firm to look beyond major metros and come to Calcutta."
The Mani Group is said to be under financial stress.
KKR has been investing in India since 2006. It opened its Mumbai office in 2009. The firm has so far invested around $3 billion in Indian companies through its private equity business, and provided more than $5 billion in financing to companies through its corporate and real estate-focused NBFCs.
In terms of KKR's real estate financing business, the firm has deployed or committed approximately $1.3 billion through its financing activities since 2015, covering more than 20 transactions.
The real estate NBFC is operating in the metropolises, including Bangalore, Pune, Mumbai, Chennai, the National Capital Region and now Calcutta.
Sources in the real estate industry said KKR had been looking closely at several Mani projects, including the 100-acre IQ City in Durgapur, where the company runs a hospital and a medical college, and a proposed assisted living project at Baruipur. The transaction will open up possibilities for other developers, they said.
KKR's entry comes at a time when private equity investment in realty rose to a record high in the first quarter. According to a report by consultancy Cushman & Wakefield, investors pumped in $2.6 billion between January and March. Mumbai was the biggest recipient of private equity. Several tier-II cities such as Bhubaneswar, Surat, Mohali and Coimbatore also managed to attract investment.
The Cushman & Wakefield study suggests that residential real estate - driven by the affordable housing sector and the creation of a Real Estate Regulatory Authority in several states - has started attracting fund houses along with the logistics sector.
So far, offices and malls were the only two drivers for global fund flow to India because of their rental income business model.
Calcutta has generally been regarded as an uninspiring market for office space - annual transactions are just about 20 per cent of comparable markets like Hyderabad and Pune.