Cash-rich PE firms, NBFCs seek deals from realtors on social media

Deals for stalled projects, last-mile financing being sought

Last week, Amar Merani, chief executive and managing director (MD) of Xander Finance - the lending arm of Singapore-based private equity (PE) firm Xander - asked for last-mile or finished commercial and residential inventory deals for long-term structured credit on his LinkedIn profile.

Merani said manufacturing and service companies outside real estate - but having a robust business model, distinct cash flows, and model leverage - can also reach them.

With physical business development (BD) being low, certain cash-rich PE funds and non-banking firms are seeking deals for last-mile funding or stalled proejcts on social media platforms to build their pipeline.

"We cannot physically reach all developers who have inventory and find out who has how much. We are reaching out to developers and intermediaries through social media," said Merani.

He said the firm will do deals of Rs 30-50 crore. "We want to deploy money in three-six months when people are dormant," said Merani.

He also added the firm has deleveraged its balance sheet in the past two years, has cash on its books, and is looking to raise money in the near future.

SBICAP Venture's SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund is also active on professional networking sites.

"We have taken another step forward to support the real estate sector. Given the extraordinary circumstances, SWAMIH Investment Fund 1 shall now provide construction funding at 12 per cent internal rate of return," said Irfan A Kazi, chief investment officer, SWAMIH Fund. The Rs 25,000-crore SWAMIH Fund announced by the government for completion of projects saw its first closure of Rs 10,000 crore in December last year.  SBICAP Ventures is the fund manager for SWAMIH.

Rituraj Verma, partner at Mumbai-based Nisus Finance Services, recently came out with a post on LinkedIn, stating it is looking to invest in stalled residential projects in Mumbai, Pune, Hyderabad, and Bengaluru through its AIF2 Dalmia Nisus Fund.

The fund will strike deals by issuing non-convertible debentures with a coupon of 18-20 per cent and with a term of two-three years.

"We realise that digital propagation of our intent may bring forth better pipeline efficiency. So far intermediaries and direct contacts provided deals. With physical BD efforts being low, digital methods to source quality trades will be needed," said Amit Goenka, chief executive and MD at Nisus Finance Services.

Goenka said it has raised Rs 250 crore before lockdown and could now raise as much as Rs 750 crore. It would deploy Rs 250 crore by March next year, he added.

Another lender RattanIndia Finance, a joint venture between Lone Star and RattanIndia, is reaching out to its existing builder relationships across thfe country by personally speaking and understanding their thought process and key areas where they need support currently, said Anchit Lakhotiya, head, real estate at RattanIndia Finance.

"Additionally, we used social media to send a private message/link to industry connects for sharing opportunities they are evaluating and we can look at doing it solely or arrange for them or do it jointly with our peers or participate in a larger opportunity," said Lakhotiya.

Thomas Devonshire-Griffin, head of capital markets, alternatives, and hotels, JLL India, said fund managers would use virtual reality and other tools to do a preliminary assessment.

"They would still rely on physical inspection of the asset while making deals. The current scenario will potentially lead to more distress in markets, and banks globally often resort to selling through online auctions," said Devonshire-Griffin.