Big churn in realty PE

Senior executives change jobs as new platforms emerge

The real estate private equity (PE) segment is seeing a churn at the top. Over the past three months, three senior executives have changed jobs and a similar number of PE veterans are launching new funds and realty-focused companies.

Rajat Tandon, executive director at India Real Estate Partners, a PE fund set up by former Morgan Stanley Real estate Investing India head Naresh Naik, has put in his papers. Tandon is moving to Proprium Capital Partners as India head. Proprium - founded by J Timothy Morris and Jan Willem de Geus, who had served as managing directors in Morgan Stanley's real estate division - manages $3-billion global funds and has raised fresh funds of $500 million to invest in emerging nations.

Recently, Ashish Khandelia, head of acquisitions at Morgan Stanley Real Estate, joined global PE major Kohlberg Kravis Roberts (KKR) as head of its upcoming realty-focused non-banking financial services company in India. Incidentally, Tandon, Naik and Khandelia were colleagues at Morgan Stanley Real Estate.

Another US-based real estate investing giant, Starwood Capital Group, also saw its entire team moving out after the firm shut its India operations. Sundaram Rajagopal, the company's managing director for India and south East Asia, has joined investment management firm Ada Investments as senior partner and CEO of Ada Real Estate. Rajagopal, who had earlier served as managing director of Lehman Brothers' Real Estate Partners, had replaced Balaji Rao at Starwood Capital.

According to experts, inaction in many of the existing fund houses are making executives look for new jobs. "Many fund managers are not able to raise funds globally and certain funds have done badly that investors are shying away from investing in them," said Sanjay Dutt, executive managing director at realty consultant Cushman & Wakefield. Added Amit Goenka, managing director at Essel Finance: "There are two reasons for it. One, when funds are not being raised and deployed, there is a limited scope for the executives' carry (their share in profits) and secondly, there are many bigger platforms are being set up which is attractive option for them." Goenka said bigger platforms such as KKR are also attracting executives from existing fund houses. "Executives would move into larger platforms and fund houses who manage larger quantum of funds. They also move if they believe their growth has stagnated or ranks have not moved."

New platforms
Some of the realty PE veterans are also setting up their own funds. For instance, Kuldip Chawla, director at fund manager Red Fort Capital, quit the firm to set up ASK Strategies, which is setting up a realty fund.

Last year, another PE veteran, Ramesh Jogani, managing director and CEO of the Ajay Piramal group's Indiareit Fund Advisors, quit to set up a venture. He was a property developer before joining the fund manager. Bani Banerjee, a veteran of 17 years with The Chatterjee Group, left the company to launch two PE funds to tap opportunities in Indian real estate, hotels, and film and entertainment sectors.

Second wave
This is the second wave of churn in realty PE. A few months ago, Rajesh Jaggi, managing director of Peninsula Land, an Ashok Piramal company, had moved to Everstone Capital, a fund management firm set up by Sameer Sain, as managing partner of the real estate business.

Prior to that, Shishir Baijal, partner, Everstone Capital, had joined the Indian arm of global real estate consultant Knight Frank as country head and managing director.

Goenka was national director (capital transactions) at consultant Knight Frank before he joined Subhash Chandra's Essel group to run Essel Finance, which has floated PE and NBFC arms, among others.