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Xander to seal $550M platform deal with IFC for commercial realty

19 December, 2015

Alternative investments firm The Xander Group Inc is in the process of inking a joint investment platform with International Finance Corporation (IFC), the investment arm of World Bank, to acquire office and industrial parks in key markets of India.

The platform will invest a whopping corpus of $550 million assets across key markets, with IFC contributing $20 million in equity and $70 million in debt towards the venture, it said in a note on Friday.

The venture will buy office properties in top realty markets including Mumbai, Pune, Delhi – NCR, Chennai, Bengaluru and Hyderabad to increase availability of Grade A office space stock in the market.  

Separate emails written to spokespersons of IFC and Xander for more details went unanswered.

VCCircle could not immediately ascertain if more investors are likely to come on board for this platform.

Notably, this is the second such structure for Xander Group for commercial play. In May last year, it formed a $300 million platform with an investor consortium led by Dutch pension fund APG Asset Management NV to buy income generating, institutional grade commercial assets across India’s main office markets.. It had kept the option of enlarging the corpus to $500 million in future.

This comes soon after Rohan Sikri, partner at Xander Investment Management Pte. Ltd., Singapore, in a recent interaction with VCCircle said that the company looking to step up its investment activity in India over the next 12 months as it sees attractive opportunities in its core asset class.

Going by our existing pipeline, we definitely have the appetite and the intent to invest overall $500-600 million over the next 12 months across the various platforms of the Xander group, he had said.

Xander invests through three platforms – private equity funds that invest in real estate, hospitality and infrastructure segments besides selective private investment in public equities (PIPE) type deals; Virtuous Retail, which is a retail real estate platform and credit business through non-banking financial company Xander Finance.

Indian real estate market is going through a prolonged slowdown with consumers sentiments taking much longer to revive. However, the commercial segment has seen activity with leasing activity picking up over the last two-three quarters. According to consultancy firm JLL, India’s office space absorption during 2015 stood at 35 million sq ft – the second-highest figure in the country’s history after 2011.

Industry watchers expect the overall market, most importantly residential segment, to revive in the next 6-12 months.

The investment arm of World Bank is stepping up its focus on Indian real estate market at a time when other global investors have also shown renewed faith towards India. Recently, IFC forged another joint platform with civil construction and real estate major Shapoorji Pallonji & Company Ltd (SPCL) to develop affordable housing projects in India. The $200 million co-investment platform also saw participation from Standard Chartered Private Equity and Asian Development Bank (ADB).

Several large global asset management and pension funds have ramped up activity towards Indian realty market through the so-called platform deals where they directly collaborate with developers as opposed to backing a realty-focused fund.

A joint investment platform, which allows an investor to back a bunch of projects to be taken up by a developer, has emerged as an important tool of deal making in real estate private equity.

Goldman Sachs recently sealed such a platform deal with Nitesh Estates to develop commercial assets in the country. Prior to that, Singapore’s sovereign wealth fund GIC tied up with Brigade Group to develop residential projects in South India.

In 2013, CPPIB and Shapoorji Pallonji Group formed a strategic alliance to acquire foreign direct investment-compliant office buildings in major metropolitan areas in India.


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Xander to seal $550M platform deal with IFC for commercial realty

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