Realty funds ask for higher cover, turn cautious in lending to developers

HDFC Capital, real estate fund management arm of HDFC, is also taking a conservative view on the assumptions regarding sales and cash flow

Real estate-focused private equity (PE) funds are asking for higher cover and taking a conservative view of cash flow from projects.
 
This is taking place as developers go through a liquidity crunch in the wake of the IL&FS group’s defaults. This led non-banking financial companies (NBFCs) to curb lending for realty developers.
 
Though a handful of PE funds — such as those managed by Motilal Oswal, Kotak, HDFC Capital, and some others — are active in the market, they are now stricter in evaluation of deals.
 
For instance, said Sharad Mittal, executive director at Motilal Oswal Real