KKR and GIC start lending on Indian real estate

KKR has set up a real estate lending platform in India with an investment from Singapore’s sovereign wealth fund GIC.

It is the second non-banking financial company (NBFC) set up by KKR in India reports Real Estate Capital’s sister publication,  Private Debt Investor, and it will provide structured credit solutions for the country’s real estate sector. KKR’s first NBFC was set up in 2009 allowing the New York-based firm to extend more than $2 billion of structured financing to 21 business groups in India.

“The launch of the India-focused NBFC marks a milestone for our global real estate platform, and we are thrilled to bring long-term capital to India’s real estate sector,” Ralph Rosenberg, global head of KKR Real Estate, said.

“We are excited to assist a sector that is still under-built. While many lenders provide debt to this sector, there is a need for solution-oriented, non-dilutive capital for property developers. We intend to fill that gap and contribute to the continued development of India’s residential and commercial real estate sectors,” Rosenberg continued.

The amount of the investment from GIC was undisclosed. However, a source  said that the NBFC will be real estate focused, unlike the first which was sector agnostic, and that three real estate deals struck in 2014 were made in preparation for the vehicle’s official launch.

It’s understood that the three real estate loans, with an aggregate amount of around US$193 million, will be held by the vehicle .

“This sector-focused NBFC further enables KKR to provide tailored financing solutions to companies, and adds to our established private equity and lending businesses in India,” said Sanjay Nayar, chief executive of KKR India.

KKR declined to comment beyond the statement. GIC was not available for comment at time of going to press.

PDI reported in October that KKR Capital Markets, the arranging arm of KKR, had structured and invested in two separate brownfield residential developments in India totalling $193 million, co-underwriting a $125 million debt facility to the Wadhwa Group and extending credit of $68 million the Bhartiya Group, both real estate developers.

GIC’s investment in the NBFC follows its $200 million purchase of a controlling stake in Mumbai-based real estate firm Nirlon last month. Loh Wai Keong, managing director and co-head of Asia GIC Real Estate Pte Ltd, said in a statement at the time: “This acquisition is consistent with our strategy in India to invest in assets that generate stable income streams over the long term.”

Other overseas investors to make commitments to Indian real estate debt in the last year include Canada Pension Plan Investment Board. It invested with vehicles managed by the Mumbai-based Piramal Group.