Global alternative assets giant KKR & Co. said on Monday that it has made a debt investment of Rs 725 crore (around $102 million at current exchange rates) in a project of Bengaluru-based developer Embassy Group.
KKR said in a statement that it has extended financing to Embassy’s premium office development in Bengaluru via KKR India Asset Finance Pvt. Ltd, its real estate-focussed non-banking financial company (NBFC).
“KIAFL looks to provide tailored, flexible financing solutions to high-quality projects in strong micro markets,” said Sanjay Nayar, member and head of KKR India. “With this in mind, mid-market residential and commercial projects in Bangalore are among the most interesting themes for us.”
KKR India Asset Finance was set up in 2015 and has invested more than $1.5 billion in India’s realty sector across projects in Bengaluru, Hyderabad, Mumbai and Pune.
KKR’s NBFC has previously backed projects of Pune-based developer Kolte Patil and a Ghaziabad project of SARE Homes.
KKR India Financial Services Pvt. Ltd, set up in 2009, was the PE firm’s first NBFC in the country. It specialises in corporate credit.
VCCircle reported last month that KKR was gearing up to launch a large credit fund to take advantage of the growing deal volume in the debt segment and step into the space ceded by banks struggling with bad loans.
Embassy Group is known for its commercial projects and has delivered 53 million sq ft of residential, retail, hospitality space as well as industrial warehouses. It has a separate platform with private equity giant Warburg Pincus for warehousing assets.
Embassy Office Parks REIT, the real estate investment trust platform of Embassy Group and private equity giant Blackstone Group, in December received regulatory approval for an initial public offering in what would make it India's first real estate investment trust to list on the stock exchanges.
The duo is looking to list a large pool of commercial assets that consist of some of the top Grade A offices in the country.
Debt has played an important role in India’s real estate market, especially in the residential segment. Over the last few years, NBFCs have also expanded their investment horizon to include commercial real estate in their portfolio, with the segment proving to be a bright spot in an otherwise sluggish market.