Real Estate Newsletter - Avendus
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Transcript of Real Estate Newsletter - Avendus
Real Estate Newsletter SEPTEMBER 2010
Contents
Industry News .......................................................2
Private Equity News .............................................8
Regulatory Buzz ................................................ 10
Land Deals ........................................................ 12
Technology Parks/SEZs .................................... 12
Hospitality .......................................................... 13
Commercial Properties ...................................... 16
Residential ......................................................... 17
About Avendus Capital ...................................... 21
Contact Details .................................................. 21
Disclaimer: The news contained herein has been taken from published sources as indicated under each item. Avendus will not be held liable for any erroneous data as published in the source indicated. Avendus also does not take any responsibility for any errors or omissions or results of any actions based upon
this information.
Editorial Dear Reader,
While Central Banks of developed countries are continuing
with the policy of quantitative easing to contain deflation
risk, investors are pouring money into emerging markets.
Strong criticism has started to come from emerging markets
as currency appreciation is fueling the worries of potential
asset bubbles. With South Korea and Brazil already starting
the scrutiny of foreign funds flowing into the respective
economies, other countries are bound to follow suit.
In the Indian Real Estate Market total market value of under
construction projects has crossed $100 Bn. The share of
commercial properties under construction has increased to
34% on the back of interest from private equity funds in
rental yield. NCD rush continues with developers being
confident about consumer demand. Market is showing
tremendous appetite for Real Estate backed secured fixed
income instruments.
Residential prices across the country are either on their way
to breach 2007-08 highs or have already done so. Indian
households however are still struggling with stagnant
income and stubborn inflation. In such a situation one
wonders if realty is losing reality.
Happy Reading!
Avendus Real Estate Team
2
Industry News
BMC REVIVES POLICY ON AMENITY
PLOTS
The Times of India
In a move that will give space-starved Mumbai
more breathing space, the Brihanmumbai
Municipal Corporation (BMC) has decided to
revive its old policy of not sanctioning the entire
floor space index (FSI) unless the builder
surrenders the developed civic amenity on his
plot free of cost to the corporation. The amenity
plot may be a garden, a welfare centre,
dispensary, municipal market, etc. A T Shintre,
director, engineering and special projects, who
is in charge of the Development Plan and
Building Proposal department, confirmed the
BMC‘s decision to resurrect the policy. In fact,
the Development Plan department has been
asked to prepare a list of all amenity plots
across the city that is due to the corporation.
Since 2003, the BMC was not only granting the
entire FSI, but also the occupation certificate
without insisting on the amenity plot. It only took
an undertaking from the developer that the
amenity plot would be handed over whenever
the BMC asked for it.
DLF LAUNCHING ULTRA-RICH HOMES
Financial Chronicle
Economic hard times are unmistakably easing
for the realty industry and market leader DLF is
signalling this change with an ultra-luxurious
housing project in Shimla, where it would sell
only to the elite. From a market that has been
driven by affordable housing ever since
recession hit the world in 2008, DLF's new
project - 'Sama' homes - will see a marked shift
in pricing, an indication that demand for high-
end housing is returning and returning strong.
According to sources, DLF, the country's largest
realty firm, will develop about 170 villas, 100
apartments and hotels across Shimla, Kasauli
and Goa at an investment of Rs 500 crore. A
source familiar with the project said: "The
company will sell 24 villas costing about Rs 3
crore in Shimla purely on invitation to the very
elite in the society to maintain a like-minded
profile of residents."
DLF PROJECTS PICKUP IN NEW
LEASES IN FY11
Financial Chronicle
DLF, the largest real estate developer in the
country by sales and market capitalisation, is
looking at better than expected leasing numbers
in the present financial year with the
improvement in macro economic trends in the
country. According to the company‘s annual
report, DLF has projected new leases of three to
four million sq ft in the financial year 2011. In the
first quarter, it already leased one million sq ft
with improvements in the global economy, the
company annual report said. In the last financial,
the company was able to lease only 0.76 million
sq feet of office space as it faced difficult time in
the property buying and leasing business in the
country. The company has set itself a five million
square feet lease target to enable a listing, of
the now merged entity of DLF Assets (DAL) as a
3
real estate investment trust (REIT), at the
Singapore Stock Exchange.
GODREJ PROPERTIES TO ENTER
CHENNAI’S PROPERTY MARKET
Financial Chronicle
Godrej Properties is all set to enter the Chennai
property market. It will develop about 12.5 acres
— belonging to Amgalgamations Group
company, Addison Paints and Chemicals — as
a residential apartment complex through a joint
development. The property is located close to
Chembarambakkam on the Chennai-Bangalore
national highway, just after Poonamallee, a
western suburb, whose surroundings have seen
the launch of a slew of new residential projects.
―The firm plans to develop 1,500 residential
apartments in the property. Area of most of the 2
BHK and 3 BHK apartments will range between
1,200 sq ft and 1,400 sq ft. The company will
also have 1BHK studio apartments on offer,‖ a
property consultant said.
TOP BUILDERS PLEDGE SHARES TO
RAISE FINANCE
The Financial Express
Promoters of at least half a dozen property and
infrastructure developers have pledged lion
share holdings in their companies to raise
finances. Some of these companies have been
included in the BSE Realty index. Analysts say
the trend is the offshoot of the downturn in the
real estate business with the sector going down
in the priority list of lenders. According to
information gathered by FE, the promoters of at
least six major infrastructure and property
development companies had pledged more than
50 percent of their shares with banks and
financial institutions as on the quarter ending
June. These firms are Horizon Infrastructure,
Ansal Properties, Parsvnath Developers,
Unitech, Orbit Corporation and Ackruti City.
Others with a high incidence of pledged shares
include PBA Infrastructure (47.16 percent), DS
Kulkarni (39.69 percent), DB Realty (64.03
percent), and Peninsula Land (26.77 percent).
Promoters of some other firms such as IRB
Infrastructure, Marg and Era Infrastructure had
recently revoked a part of their pledged shares
from lenders. Since June, the average value of
BSE Realty index has appreciated from
3,196.82 points to 3,626.57 points as of
September 15.
HINDUJA REALTY PLANS RS 5,500
CRORE INVESTMENT
Mint
Hinduja Realty Ventures Ltd said it will invest Rs
5,500 crore in the next three five years to
develop four projects in Hyderabad, Bangalore
and Chennai. The projects, which will have a
total of 30 million sq. ft of saleable area, will
have both residential and commercial spaces.
REALTY FIRMS RUSH TO NCDs FOR
FUNDS
Mint
If qualified institutional placements (QIPs) were
the flavour of 2009, non-convertible debentures
(NCDs) are emerging as this year‘s tool-of-
4
choice for real estate firms. At least 10
developers have raised or are raising nearly Rs
3,000 crore this year through NCDs, a debt
instrument that cannot be converted to corporate
stock and which offers healthy yields of 14-18
percent. There were hardly any NCD issues by
real estate firms last year. Developers are
raising about Rs 5,000 crore through QIPs this
year but that‘s a shade on last year‘s numbers.
In 2009, India‘s top three realty firms by value—
DLF Ltd, Unitech Ltd and Indiabulls Real Estate
Ltd, in that order—alone raised nearly Rs 13,000
crore through QIPs. Many of the developers
eyeing NCD issues are mid-sized firms, which
need quick capital to repay debt, buy land or
complete their projects. Large, listed developers
typically opt for QIPs, private equity (PE) funding
or other instruments involving equity to raise
capital. This year, though, DLF and Housing
Development and Infrastructure Ltd (HDIL) have
announced NCD issues. DLF said in February it
planned to issue NCDs worth Rs 1,000 crore;
HDIL has opted for a combination of a Rs 1,150
crore NCD issue, a QIP of Rs 1,100 crore and a
warrants issue worth about Rs 190 crore.
―NCDs, which are pure debt products and
relatively unexplored by the real estate sector,
suddenly seem to be have become a new-found
opportunity, which are being used as an easy
way to lure investors,‖ said Amit Goenka,
national director-capital transactions, Knight
Frank India Pvt. Ltd, a real estate consultancy.
RICH INVEST IN REALTY FIRM NCDs
Financial Chronicle
Real estate companies are now tapping high net
worth individuals (HNIs) through wealth
managers after bank funding became scarce
with RBI cautioning banks from lending to real
estate. Leading private/foreign banks and
financial institutions such as Kotak Mahindra,
Barclays, Standard Chartered Bank, Credit
Suisse and Edelweiss Capital have been active
in this fledgling market. To attract HNIs, the
realty firms are floating medium term non-
convertible debentures -of 3-5 years with
interest rates ranging between 13 and 18
percent in most cases, some even stretching to
24 percent and above, depending on the
financials of the company and collaterals
offered. Though the minimum investment is Rs
10 lakh, HNIs are investing as high as a few
crores. In return, the real estate companies are
pledging both land and stocks. Kapil Krishan,
chief financial officer (CFO) of India Infoline
(IIFL), said the real estate sector offers an
alternate avenue for investment for HNIs and
promises higher yields with lower risk, adding
that it is a `win-win situation' for both the
investors as well as property companies. IIFL,
which recently advised a few HNI clients to
invest in a Mumbai project, is now in talks with a
few big real estate developers that are floating
rated NCDs. A senior Edelweiss Capital official
said that they are selling HNIs realty bonds of all
major listed realty firms who have such bond
issuances.
5
GOVT TO UNLOCK 30K ACRES IN NCR
The Financial Express
The National Capital Region (NCR) may soon
have 30,000 acres of land available for
residential construction, if the government‘s
steps in this direction bear fruit. The Centre is
attempting to fast track the resolution of disputes
over NCR title deeds, which force developers to
stay away. NCR is estimated to be short of 5
lakh housing units, and demand is growing at 1
lakh units a year. The move will spark price
correction, releasing over 2 million housing
units. The exercise piloted by the urban
development ministry and implemented by the
NCR planning board, will be kicked off by year-
end. The exercise will unlock land in three
states: eight districts in Haryana (Gurgaon,
Rewari, Faridabad, Sonepat, Rohtak, Panipat,
Jhajjar and Mewat); five districts of Uttar
Pradesh, (Ghaziabad, Bulandshahar, Meerut,
Baghpat and Gautam Budh Nagar) and one
district (Alwar) in Rajasthan. The government
plans to seek help from local bodies to identify
and verify land ownership, after which
independent agencies will cross-check data.
―This is good for developers who can get land
and good for consumers who can get residential
units at lower prices. But one has to see how it
is implemented. India doesn‘t have a very good
history in implementing such policy initiatives.
One also has to see how soon the free land can
be made available for developers,‖ Abhishek
Kiran Gupta, head-research, Jones Lang
LaSalle, India said.
EASY EXIT LURES PE FIRMS TO SCOUT
FOR PROJECT FUNDING
The Financial Express
Private equity (PE) firms are returning to real
estate investments through projects rather than
equity as an easier exit option coupled with the
relatively higher returns from the sector helped
them overcome their qualms. At the enterprise
level, private equity in operating companies is a
challenge. The exit is through public markets,
and the public market is tired of real estate
stories. So PE at corporate levels has gone for
an expiry now, V Hari Krishna, director, Kotak
Realty Fund said. In February, Parsvnath
Developers said it was looking at raising Rs 200-
300 crore by selling stakes in projects. IL&FS
Milestone Fund in June acquired a 74 percent
stake in HCC‘s business complex in suburban
Mumbai. IL&FS Milestone Fund is a joint venture
between IL&FS Investment Managers and
Milestone Capital Advisors. Earlier this month,
Krishna‘s Kotak Realty Fund, a unit of Kotak
Mahindra Bank, invested Rs 250 crore in Emaar
MGF‘s — a JV between Indian lender MGF and
Dubai‘s Emaar Properties --- two projects.
NITESH ESTATES GETS DEV RIGHT OF
RS 100 CRORE HOUSING IN B'GLORE
The Economic Times
Realty firm Nitesh Estates today said it has
acquired joint development right to develop a
luxury housing project worth Rs 100 crore in
Bangalore."This Rs 100-crore project will
improve the revenues of the company and is
expected to be completed within 24 months," the
6
company said in a communique to the Bombay
Stock Exchange. The company would develop
about 90,000 sq ft of high-end luxury housing
project 'Nitesh Logos'.
INTEGRATED TOWNSHIPS SET TO
MAKE A COMEBACK
Mint
Integrated townships are making a comeback.
Many of the big clusters—announced during the
real estate boom of 2006-07, only to be aborted
during the economic downturn—are seeing a
revival in interest. Developers and realty funds
are backing townships again but mostly for
residential developments, as home sales have
been driving the renewed enthusiasm in the
sector. At least 25 large residential townships
were shelved during the downturn as builders
squeezed for funds opted for smaller projects.
Earlier this month, a 700-acre township was
launched in Sriperumbudur near Chennai, some
three years after it was announced. It boasts of
a 150-acre golf course, villas, apartments, a
hotel and a hospital and is targeted at non-
resident Indians and golf-loving foreign
communities. Sriperumbudur is a manufacturing
hub for foreign brands such as Hyundai, Saint
Gobain, Nokia and BMW and ideal for such a
township. Kotak Realty Fund has picked up a 28
percent stake for Rs 270 crore in the project,
named Aavisa, which will be developed by
IVRCL Assets and Holdings Ltd. ―Township
projects are a safe asset class in India during a
time when (venture) funds require to deploy
money and developers need that money to
invest in such projects,‖ said Ashutosh Limaye,
associate director (strategic consulting) at Jones
Lang La Salle Meghraj, a property advisory.
―However, the success of township projects
would depend on the location and in acquiring
adequate land in proximity to a large city.‖ In
Bangalore, a 300-acre project by Prestige
Estates Pvt. Ltd, in which Red Fort Capital
Advisors Ltd invested Rs 150-200 crore some
two years ago, is set for a launch soon.
―Integrated living is a great concept but only if
the developer has the funds to execute and has
the intent to provide infrastructure, those
projects can be easily developed,‖ said
managing director Subhash Bedi. Developers
such as Godrej Properties Ltd and Kumar Urban
Development Ltd, for example, are building
multiple townships but largely with an affordable
price tag.
PROPERTY IPOs FACE PERFECT
STORM
Mint
High prices and rising mortgage rates are
hurting demand in India‘s once-booming housing
market, jeopardising a pipeline of about $6
billion in initial public offerings (IPOs) from
Indian property companies. The real estate firms
are seeking funds to finance land acquisitions
and lock in runaway land prices but their IPOs
are faced with the prospect of poor investor
response. ―All the big developers (with IPO
plans) are waiting. They want to raise money for
new projects but they are already holding so
much inventory,‖ said Surajit Pal, sector analyst
at brokerage Elara Capital. At least 12 real
estate firms are suspending their offers despite
7
getting final regulatory approval, according to
analysts. Another six to seven firms have filed
their draft prospectus. But only three real estate
IPOs have hit the market so far this year. The
line-up includes a long-delayed IPO from Emaar
MGF, the Indian JV of Dubai‘s Emaar
Properties, a $600 million IPO from Lodha
Developers, a $600 million offer from Sahara
Prime City and a $515 million issue from
Embassy Property. In June, Lodha, among
India‘s top developers by sales signed India‘s
costliest land deal, agreeing to pay $850 million
for a plot in central Mumbai. Last month,
Indiabulls Real Estate won two plots at land
auctions in Mumbai for $430 million, or twice the
asking rate. ―These are the highest-ever land
prices paid at a time when housing prices have
already crossed the peaks in 2007,‖ said Sanjay
Dutt, chief executive at property services firm
Jones Lang LaSalle India. Some analysts are
starting to see interest resume at the high end of
the market. This could benefit big developers
including DLF and Indiabulls Real Estate.
Among the IPO hopefuls, analysts rate Oberoi
Realty, Raheja Universal and Prestige
Developers as the companies more likely to hit
the market, given their medium-size offerings
and strong presence in a single key property
market.
UNDER-CONSTRUCTION PROJECTS
TOP $100BN
The Times of India
The total market value of under-construction
projects in India has crossed the $100-billion (Rs
4.5 lakh crore) mark for the first time in 2010. Of
this, Mumbai, where property prices are among
the highest in the world, has nearly a 40 percent
chunk ($37 billion, or Rs 1.66 lakh crore). The
projects include residential, commercial and
retail space. The findings are in the latest Real
Estate Intelligence Service (REIS) report
prepared by Jones Lang LaSalle Meghraj.
"India's top 100 developers are currently setting
up 7.5-8 lakh apartments in the top seven
metros - Delhi, Mumbai, Chennai, Bangalore,
Kolkata, Pune and Hyderabad," said Abhishek
Kiran Gupta, head of REIS. "The market value of
real estate under construction in India has
increased from $69.4 billion in 2006-end to
$101.3 billion in June 2010, which equals 8.2
percent of India's nominal GDP for 2009," the
report said. The market value and costs of
development have been estimated at prevalent
property prices and costs of construction,
considering the variance in asset classes and
geographical locations, it added. The residential
component contributes 66 percent ($66.5 billion)
of this $101.3 billion, while the rest is contributed
to by commercial office and retail space
combined. The premium segment comprises
only 4 percent of the saleable area being
developed, but to 24% of the market value.
"While NCR- Delhi leads in terms of volume of
residential properties being developed, Mumbai
contributes a larger share to the market value," it
said. On the other hand, the market value of
commercial office and retail under construction
has remained range-bound during 2006-2010
due to the effect of an increase in construction
activity offset by a fall in capital values.
"However, the contribution of residential has
amplified due to a confluence of increase in
8
construction activity and rapid recovery of
property prices," the report said.
RESIDENTIAL MARKET IN FOR A
CORRECTION ON FEARS OF BUBBLE
BURST
Financial Chronicle
The country's residential market is looking at
some correction in the coming months as fears
of a 2008-like real estate bubble burst are
looming large, say analysts. Delhi and Mumbai
have already breached their 2008 highs by 18
percent and 30 percent, respectively. However,
Chennai, Gurgaon and Noida are about 10
percent to 30 percent lower than their 2008
highs, according to Kotak research. Residential
prices have gone up by two percent to five
percent in this quarter alone, according to real
estate consultants Jones Lang Lasalle India. "In
the initial part of the revival phase, market
sentiments improved on the heels of various
factors, including improved health of the stock
market, vastly rationalised property rates and
increased job security. However, the uptick in
sentiments has once again given way to caution
among home buyers, who are discouraged by
the rise in prices and uncertainty on the home
loan front.
ARIHANT SUPERSTRUCTURES
MULLING UP TO RS 100 CRORE PE
FUNDING
The Hindu Business Line
Leading real estate firm, Arihant
Superstructures, is looking at raising Rs 50—
100 crore through private equity early next fiscal
to fund its expansion plans, a top company
official said. ―We are considering various options
of fund raising such as construction finance or
private equity. We are looking at mainly PE
though and might raise about Rs 50—100
crore,‖ Arihant Superstructures‘ managing
director, Ashok Chajjer, said here. Asked about
its future projects, Chajjer said the company is
currently developing around 10 affordable
housing projects spread over 15 lakh square
feet of area across the country. He also said that
all the current projects would be completed over
the next four to five years.
Private Equity News
KOTAK ARM PICKS UP 28 PERCENT IN
AAVISA
The Financial Express
Kotak Realty Fund, part of the Kotak Investment
Advisors Limited, has picked up 28 percent
stake for Rs 270 crore in Aavisa, an integrated
township project being developed by IVRCL
Assets & Holdings of IVRCL group. IVRCL A&H
managing director& vice-chairman E Sunil
Reddy said, ―Upon completion, the project would
be one of a few LEED certified townships in the
country.‖ The company has floated a special
purpose vehicle called IVRCL Hotels & Resorts
to develop the integrated township project being
developed over a period of next five to six years.
Based on the internal valuation, Kotak Realty
Fund has picked up 28 percent stake for a
consideration of Rs 270 crore. Reddy said, the
first phase of the project, to be developed in 52
acres, with 137 luxury villas (2,853 sqft to 5,400
sqft in size) and 102 independent houses,
9
(1,503 sq ft to 1,980 sq ft) would be completed
over a period of 18 months. ―Interestingly, 15
percent of the first phase has been already sold
out,‖ he said.
KOTAK REALTY INVESTS RS 250
CRORE IN EMAAR MGF PROJECTS
Mint
Kotak Realty Fund, a unit of financial services
firm Kotak Mahindra Bank, has invested Rs 250
crore (around $53.68 million) in two projects of
Emaar MGF. ―We are investing Rs 250 crore in
Emmar MGF‘s residential project in Gurgaon,‖
said V Hari Krishna, Director, Kotak Realty Fund
said. Kotak has invested in two properties-
Emerald Estates and Palm Terraces-both
located at Gurgoan, in the National Capital.
Region (NCR). The investment was made from
its domestic fund, which has a corpus of Rs1600
crore, Krishna said. ―It‘s largely pre-sold projects
and so, relatively no-risk. And this gives us an
opportunity to participate in high-growth
Gurgaon market,‖ he added.
ASK GROUP CO BUYS STAKE IN ATS
NOIDA PROJECT
The Economic Times
Ask Property Investment Advisors has picked up
an undisclosed stake for 50 crore in property
builder ATS Group‘s 1,000-crore residential
project in Noida, a company executive said. The
money will be invested into a special purpose
vehicle or a joint venture company formed to
develop the 2 million sqft residential project in
Noida. Amit Bhagat, managing partner at the
investment firm, said this is the first investment
by the fund. Formed last year, ASK Property
Investment Advisors is part of financial services
firm ASK Group. It targets investments in real
estate sector in seven cities in the country. ―We
expect to deliver the project in Noida well before
the target of 30 months,‖ said ATS Group MD
Getamber Anand. The Noida-based property
builder is focused on residential projects in
northern India. Fund raising in the real estate
sector is showing signs of recovery after the
financial meltdown cast its shadow on the sector
over the last two years. In June 2010, IL&FS
Milestone Fund invested 575 crore in a Mumbai-
based commercial property. The Delhi-based
Vatika Group is reportedly in talks to raise 800-
1,000 crore from Deutsche Bank for its
upcoming residential project in the NCR.
ANAND RATHI, KNIGHT FRANK SET TO
RAISE RENTAL YIELD FUND
Mint
Anand Rathi Financial Services Ltd (ARFS) has
tied up with real estate consultancy firm Knight
Frank India Pvt. Ltd to launch a realty-focused
private equity (PE) fund. The fund targets a
corpus of Rs 250 crore, with an option of raising
another Rs 100 crore, according to executives at
both firms. Knight Frank will be the exclusive
investment adviser to the fund. The fund will be
based on rental yields and invest in commercial
real estate. Rental yield funds typically invest in
properties that have been rented out, based in
the premise that such properties have lower risk
compared with properties still being developed.
10
PELICAN GETS PRIVATE EQUITY
FUNDING
The Hindu
Pelican Group, a Chennai based real estate
developer, has raised Rs. 20 crore as growth
funding from Milestone Capital Advisors. The
company will use the proceeds to fund its
expansion plans in the affordable housing
market, says a release. The company focuses
on Tier-2 and Tier-3 locations for plotted
development and affordable housing projects.
VASAVI TIES UP WITH DEWAN VC
The Financial Express
Chennai-based Vasavi Housing Infrastructure
Ltd (VHIL) has formed a joint venture with
Dewan Housing Finance Ltd Venture Capital
(DHFL VC) for promoting its latest project
Marutham at Meppur in Chennai. The JV is on
50:50 basis wherein both VHIL and DHFL VC
will bring in 50 percent of the capital each for the
project. P B Krishna Prasad, CEO, VHIL said,
―Vasavi had completed more than 50 residential
projects and now has taken to service
apartments, commercial buildings, and
townships. This JV will ensure that the project
Marutham not only gets the funding required but
also ensures the sale of flats.
AZURE CAPITAL SETS SIGHTS ON
SOUTHERN, WESTERN MKTS
The Financial Express
Venture capital firm Azure Capital Advisors,
which has floated a new realty fund, is looking to
invest in small to mid-size residential projects in
the southern and western regions of the country,
together with Mumbai re-development projects.
Azure Capital expects to close to 6-8 re-
development projects in Mumbai through its
India Realty Fund-1. It plans to start financing
the projects from October onwards. ―Each
projects will be about Rs 40 to Rs 45 crore. If
more capital is required we will raise it through
co investors,‖ said Shailesh Ghorpade,
managing director and chief executive, Azure
Capital Advisors.
Regulatory Buzz
STATE PROTECTS HOMEBUYERS
Hindustan Times
Developers will now be forced to fix prices of
houses on their carpet area. The state
government has decided to issue a joint
directive to local bodies to ensure building plans
are approved only after a developer mentions
the carpet area and useable area of an
apartment separately. The housing and urban
development departments will issue the
directives by next week, after receiving
instructions from Chief Minister Ashok Chavan
―Local bodies, including the Brihanmumbai
Municipal Corporation, will soon implement a
regulation according to which developers are
supposed to mention the actual carpet area and
useable area separately while getting the three
certificates -- intimation of disapproval,
occupation certificate and building completion
certificate,‘‘ said a senior official from the urban
development department requesting anonymity
11
because he is not authorized to speak to the
media.
REALTY GIANTS TO BARE IT ALL FROM
APRIL
Financial Chronicle
Large real estate companies will be forced to
give elaborate details of their assets and land
banks from the first quarter of the next financial
year as they come under International Financial
Reporting Standards (IFRS) regime from April
2011. Big real estate companies with a net worth
of more than Rs 1,000 crore such as DLF,
Unitech, Peninsula Land and Puravankara
Projects, among others, will report the June
quarter numbers under IFRS as per the
schedule approved by the government. Other
BSE Realty index constituents such as HDIL,
Indiabulls Real Estate, DB Realty, Anantraj
Industries, Sunteck Realty, Sobha Developers,
Phoenix Mills, Parsavnath Developers, Orbit
Corporation and Ackruti City will also be
migrating to the regime as per the net worth
criteria. Accounting firms advising companies on
IFRS believe real estate companies would face
severe accounting hurdles during the transition
phase.
Jamil Khatri, executive director and head of
accounting advisory services at KPMG, said
only delivery-based sales and profits would be
recognised under IFRS. "In certain cases, where
builders have sold ongoing projects and
collected a part of the money for the work
completed, they will not be able to report any
sale or profit in their books of account,‖ he said.
LOCK-IN FOR ALL FDI IN REALTY
Mint
In what could dampen sentiments of foreign
investors in real estate, the Department of
Industrial Policy and Promotion (DIPP) has said
a three-year lock-in on overseas money will
apply to each tranche of investment. As per
Indian law, there is a lock-in period only on
foreign direct investment (FDI) in the real estate
sector. ―The lock-in-period of three years will be
applied from the date of receipt of each
instalment/tranche of FDI, or from the date of
completion of minimum capitalization, whichever
is later,‖ DIPP said. ―This is going to be definitely
retrograde,‖ said Akash Gupt, executive director
of consultancy firm PricewaterhouseCoopers
Llp. ―Locking every tranche of investment does
not make any business sense (for foreign
investors).‖ DIPP also said original investments
cannot be repatriated before three years from
completion of minimum capitalization. However,
investors are permitted to exit earlier with the
government‘s approval through the Foreign
Investment Promotion Board (FIPB). Previously,
it was understood that original investment meant
initial investment. DIPP has clarified it implies
total investment. The department has made it
customary to revise the policy document every
six months. The first such circular was issued on
1 April.
12
Land Deals
DDA LANDS IN A JAM OVER RS 758-
CRORE SERVICE TAX DUES
The Financial Express
The country‘s leading government housing
developer, the Delhi Development Authority
(DDA), is in a soup over a nearly Rs 758-crore
tax bill slapped on it for allegedly not paying
service tax for three years since 2007-08 on the
services provided by the body. The service tax
wing of Central Board of Excise and Customs
(CBEC) has issued a demand-cum-show cause
notice to DDA asking it why it has failed to pay
over Rs 757 crore tax on two services—renting
of immovable property and club or association
service —sources said. The department has
sought a reply within 30 days after which penal
action could be taken against the agency.
According to the tax department, the DDA had
not paid tax on the two specified services for
2007-08, 2008-09 and 2009-10. When
contacted, a DDA spokesperson denied any
knowledge of the development.
NTC EXPECTS TO RAISE RS 9,000
CRORE FROM MUMBAI LAND SALES
Mint
India‘s state-owned National Textiles Corp. Ltd
(NTC) raised its estimates for proceeds from
land sales after it sold property last month for
double the reserve price. The unprofitable textile
company expects to raise at least Rs 9,000
crore ($1.9 billion) from land sales in Mumbai,
NTC chairman K. Ramachandran Pillai said in
an interview. Sales across India could be double
an earlier estimate of Rs 5,000 crore in the year
to 31 March, he said.
Technology Parks/SEZs
DTC BILL TO HIT SEZ EMPLOYMENT,
INVESTMENT: EPCES
Mint
Expressing serious concerns over the DTC Bill,
SEZ entrepreneurs on Tuesday said the
proposed tax provisions would hit employment
and drive away investors from the special
economic zones. Export Promotion Council for
EoUs and SEZs (Epces) said that by altering the
SEZ Act through the DTC Bill, the government is
sending a wrong message to investors. ―These
provisions do not meet the requirement of the
SEZ scheme fully and would very seriously
affect employment, exports and investment in
the SEZs,‖ Epces chairman R.K. Sonthalia said
in a statement. The bill, which was tabled in
Parliament on Monday, proposed that the
Special Economic Zones (SEZs) notified on or
before 31 March 2012, would get income tax
benefits. And units in SEZs that commence
commercial operations by March 2014 shall be
allowed profit-linked deductions permitted under
the Income Tax Act 1961. Direct employment in
SEZs have gone beyond 550,000 people and
investment in the SEZs gone up to more than Rs
166,000 crore.
13
PUNE DEVELOPER PLANS RS 1,000-
CRORE IT-SEZ
The Hindu
The IT and ITES segment appears to have
recovered sufficiently for developers to venture
again into it. Pune-based Kumar Urban
Development will build an IT-SEZ project on
13.5 acres near the first phase of the Rajiv
Gandhi Info Tech Park there. Another 13.5 acres
have been earmarked as non-processing at the
same location. The entire project entails an
investment of Rs 1,000 crore and in the first
phase the company will invest about Rs 400
crore. All clearances for the proposal have been
received. In the first phase, about 1.8 million sq
ft will be developed, of which 4 lakh sq ft will be
operational by Q3-2011. Kumar Urban was keen
to make the SEZ cost-efficient for its clients, said
Lalitkumar Jain, Chairman.
DEVANAHALLI IT PARK TO BE
LAUNCHED BY DECEMBER
The Hindu Business Line
The Karnataka Government will launch the
Information Technology Investment Region
(ITIR) project near Devanahalli (in the vicinity of
Bengaluru International Airport) by the end of
December. The State Government, with the
support of the Centre, has decided to set up the
ITIR on 10,000 acres with an investment of Rs 1
lakh crore in two or three phases. The ITIR Act
has already been gazetted. The Minister said 20
rural BPO units have been sanctioned, of which
16 have started operations.
Hospitality
IRB ARM EXECUTES HOTEL
OPERATING AGREEMENT WITH IHCL
The Hindu Business Line
IRB Infrastructure Developers Ltd has informed
BSE that the company‘s subsidiary Aryan
Hospitality Pvt Ltd has executed hotel operating
agreement and technical services and
development assistance agreement with The
Indian Hotels Company Ltd to operate and
maintain a gateway hotel. The gateway hotel will
be constructed by AHPL at Kolhapur,
Maharashtra on a plot of land leased from IRB
Kolhapur Integrated Road Development Co Pvt
Ltd, a subsidiary of IRB Infrastructure
Developers. The proposed hotel will have 100 to
125 guest rooms along with other modern
recreation and leisure facilities. It will be
constructed within three years.
ROYAL ORCHID TO ADD 700 ROOMS IN
SMALL CITIES
The Financial Express
Hotel chain Royal Orchid Hotels is set to tap into
the smaller cities by adding 700 rooms in its new
properties by March 2011. This expansion will
be across Mussorie, Shimoga and Hospet, apart
from in Hyderabad and Jaipur, where it will be
building five-star hotels with an investment of Rs
180 crore and Rs 120 crore, respectively. The
chain operator has invested a total of Rs 500
crore in these projects, of which 60 percent was
debt and the remaining came from equity and
internal accruals.
14
ASSET HOMES OPENS ITS NEW
APARTMENT HOTEL NEAR KOCHI
The Hindu Business Line
The Kochi-based Asset Homes has opened an
apartment hotel — Asset Summit — at
Kalamasserry near here. The apartment
complex is the first-of-its-kind full-fledged
apartment hotel in the State. As many as 90
suite rooms of 500 sq ft each, with modern
amenities, would be provided for guests.
ACCOR, STARWOOD RAMPING UP
INDIA OPERATIONS
The Economic Times
Global hotel chains Accor and Starwood Hotels
and Resorts are ramping up India operations.
The hospitality majors will open more hotels and
bring their upscale and economy brands in India.
The US-based international hospitality chain
Starwood, which has two of its top brands in
Pune—the Westin and Le Meridien, will soon get
a third brand, the Four Points by Sheraton, said
Stephan Winkler, general manager, the Westin
Hotel, Pune. The Accor Group, which is present
in India through its partnership with InterGlobe,
has brought in a new partner for its India
expansion—an investment fund comprising an
affiliate of the Singapore government-promoted
GIC Real Estate Pte and the New York Stock
Exchange-listed Host Hotels and Resorts.
TAJ UNVEILS VIVANTA
Deccan Herald
Taj Hotels, Resorts & Palaces, rolled out its
second phase of rebranding exercise by
unveiling Vivanta, a five star upscale facility.
Vivanta has an inventory of 2,500 rooms.
―Vivanta is slated to appeal cosmopolitan global
traveller who appreciates new experiences and
surprises endorsed by Taj touch,‖ said Indian
Hotels Company Ltd Managing Director & CEO
Raymond N Bickson. Bickson said Vivanta has
an aggressive growth plan to scale it into 30
hotels with 5,000 rooms spread across India.
―Within next few months newly-built Vivanta will
come up at Bangalore (Yeshwantpur), Hyderbad
and Coimbatore and three in Delhi,‖ he added.
RS 1600 CRORE HOTEL TO OPEN IN
CITY
The Times of India
The capital is all set to get India's most
expensive five-star deluxe hotel when the Leela
opens here on October 1. The records started to
get set about two years back when the group
acquired a three-acre plot in the prime
diplomatic area of Chanakyapuri for about Rs
700 crore. Now, the hotel with 260 rooms and
suites has been constructed at an approximate
cost of Rs 900 crore, taking the per unit cost to
Rs 6 crore (with land cost) or Rs 3.5 crore
(without land). This is way above the average
per unit cost range of Rs 75 lakh to Rs 1.8 crore
for a five-star deluxe property, according to the
Federation of Hotel and Restaurant Association
of India (FHRAI).
15
PEERLESS TO INVEST RS 260 CRORE
IN HOSPITALITY BIZ
The Economic Times
The Peerless Group plans to invest around Rs
260 crore over the next five years to expand its
hospitality business. Peerless supremo SK Roy
said the group is exploring possibilities to build
4-star hotels in Navi Mumbai, Gurgaon and
Bhubaneswar. The group will build another 47-
room facility adjacent to its existing Peerless Inn
property in Kolkata. Peerless Hotels CEO Kunal
Sen said according to the thumb rule, the cost
works out to Rs 50 lakh per room to build a
hotel. The company plans to build an 80-room
hotel in Bhubaneswar and 100-room hotels in
Navi Mumbai and Gurgaon. Sen said the cost of
land varies between Rs 20 crore and Rs 30
crore depending upon the locations. The project
in Bhubaneswar is expected to come up first.
STARWOOD HOTELS TO TAP SUPER
LUXURY SLOT WITH 2 NEW BRANDS
Hindustan Times
Anticipating an increase in the number of
international visitors and the growing needs of
the domestic consumer, Starwood Hotels &
Resorts Worldwide is scaling up its India plan.
The company, which has nine brands, including
Le Meridien and Sheraton, will in the next 3-5
years introduce its entire portfolio in India. The
company is looking at introducing two new super
luxury brands — St. Regis and W. It is also
accelerating the growth plan for its recently
introduced brands such as Aloft, Four Points,
and Westin. At present, Starwood Hotels &
Resorts, which has 1,000 properties across the
globe, has 29 properties in India while 16 more
are currently under-development. By 2013, the
company expects its existing portfolio of 29
hotels to grow 60 percent. Tier II and III cities
are the focus areas.
NEESA BEGINS BUILDING BIZ HOTEL
AT DAHEJ SEZ
Business Standard
Ahmedabad-based Neesa Group has started
work on the first phase of its Rs 30 crore
business hotel at the special economic zone
(SEZ) in Dahej. Neesa Square, the 60-room
business hotel at Dahej SEZ, which is coming
one of the three petroleum, chemicals and
petrochemicals investment regions of the
country, the other two being in Haldia and
Vishakhapatnam.
ZURI GROUP TO RAISE FUNDS VIA PE
ROUTE, LIKELY TO OFFLOAD 20
PERCENT STAKE
The Financial Express
Bangalore-based Zuri Group Global, a
multinational conglomerate promoted by a
consortium of investors from West Asia, may
offload 20 percent of its stake as it plans to raise
funds through the PE route. Abhishek Kamani,
managing director of the group, said the
company will look for PE partners who have
expertise in the hospitality industry.
16
MATTHAN COMES TO BANGALORE
The Hindu Business Line
Matthan, a 198-room five-star hotel, becomes
the latest to join Bangalore's buzzing hospitality
scene. The hotel, located in the heart of the city
on the old HAL Airport Road, will serve the
commercial, business and infotech companies in
the area, Arya Srini Rao, General Manager of
Matthan, said. It would also serve the leisure
traveller, he said.
Commercial Properties
LIC TO BUILD MALL-CUM-OFFICE
COMPLEX AT MOHALI
The Hindu Business Line
Insurance major Life Insurance Corporation of
India (LIC) today said that will invest a sum of
Rs 1,000 crore to develop a mall-cum-office
complex at Mohali. ―The expected investment in
developing a mall-cum-office complex in Mohali
will be Rs 1,000 crore and it may be ready within
one-and-a-half to two years,‖ a senior LIC
official, who declined to be identified, said here.
On 9.6 acres of land LIC has proposed to build 6
lakh square feet of area for this project. ―Three
lakh square feet will be developed for shopping
and a mall while remaining 3 lakh square feet
area will have offices,‖ he said. Currently, LIC is
in the process of hiring an architect for this
ambitious real estate project. Consultancy
agency IL & FS has also submitted its report on
how to go about this project, he revealed. LIC
had bought 9.6 acres of land at a prime location
through auction, which was conducted by
Greater Mohali Area Development Authority in
2008 by shelling out Rs 465 crore. Interestingly,
throughout the auction, LIC remained the sole
bidder for this project and paid just over Rs 1
lakh per square yard which was the highest ever
rate in the region at that point of time. LIC has
already developed real estate projects in
Mumbai and Bangalore. ―LIC has also plans to
develop a shopping mall in Kolkata where it
possesses 5 acres of land,‖ he further said.
MANJEERA CONSTRUCTIONS
ANNOUNCES MAJOR MIXED-USE
PROJECT
The Hindu Business Line
Manjeera Constructions Ltd, unveiled plans to
develop a Rs 600-crore 1.8 million sq ft of office,
commercial cum residential mixed use project,
on the busy Kukatpally-Hitec City corridor in the
city. The project, Manjeera Trinity, is being part
funded through foreign direct investment (FDI),
made by Trinity Capital in to the project. Trinity
Capital has infused Rs 80 crore as its equity,
picking up about 49 percent stake in the project.
―We have achieved financial closure for the
project. Of the Rs 600 crore, the project will
have an equity component of Rs 150 crore and
the rest will be through debt. As we take up the
project, we will also secure advances from the
potential buyers,‖ G. Yoganand, Chairman of
Manjeera Constructions, said.
17
HOTEL LEELA TO USE SALE
PROCEEDS OF CHENNAI, PUNE
PROJECTS TO PRUNE DEBT
The Hindu Business Line
Hotel Leelaventure is looking to cash in on the
growing real estate market in Chennai, as it
plans to partly sell and lease its Leela IT Park in
Chennai. The property spread across 2.75-lakh
sq ft located in Adyar, is expected to fetch Rs
275-300 crore for the company, Hotel
Leelaventure's Vice-Chairman, Vivek Nair, said.
The deal for partial sale of the property will be
finalised in a month, he said. ―Chennai's real
estate market has picked up and the rates are
up 20-30 percent, with the growing interest from
multinational corporations and others for
commercial space. Also, there are few graded
buildings like ours with large floor space, green
area and other state-of-art commercial
amenities,‖ said Nair elaborating on the reasons
to put the property for external commercial use.
The proceeds from the IT Park will be utilised to
repay some debt of the company, said Nair. The
company has decided not to have a hotel in
Pune and instead develop the land for a
residential complex, he said. The earnings from
that initiative, which could be to the tune of Rs
250 crore, will also be used to clear debt. These
moves would enable the company reduce its
debt of Rs 2,600 crore by Rs 550-600 crore.
―The promoter holding in Leelaventure is 55
percent at present, which we intend to take
beyond 60 per cent through creeping
acquisition. Our promoters have enough cash
flows (for the acquisition),‖ said Nair.
Residential
EXPRESSWAY TOWNSHIPS MAY BE
SCRAPPED
Hindustan Times
The Uttar Pradesh government is considering a
proposal to scrap plans for five model townships
along the proposed 165 km Yamuna
Expressway connecting Noida to Agra. All land
acquisition related to the project has come to a
halt following a 37-day agitation by farmers in
Aligarh and Agra who want compensation at
rates given to their Noida counterparts. Aligarh
District Magistrate K. Ravindra Naik has written
to the state government recommending the
scrapping of the townships.
SOBHA DEVELOPERS LAUNCHES
SUPER LUXURY PROJECT
The Hindu Business Line
Sobha Developers announced the launch of a
super luxury project – Sobha Classic – on
Sarjapur Road in Bangalore that would develop
243 units across 6.9 acres. The apartments will
range from 1,752 sq ft to 2,070 sq ft priced
between Rs 76.71 lakh and Rs 90.10 lakh,
according to a company press release.
CONDOMINIUM PROJECT LAUNCHED
The Hindu Business Line
Nitesh Estates has announced the launch of its
Rs 200-crore South Bangalore condominium
project – Nitesh Caesar's Palace – located on
Kanakapura Main Road. The project would
18
develop 516 apartments on about 4.5 acres, and
would also include 30,000-sq-ft retail space, said
a company press release.
PATEL REALTY TOWNSHIP PROJECT
The Hindu Business Line
Patel Realty India Ltd, a 100-percent subsidiary
of Patel Engineering Ltd, announced the launch
of the second phase of its integrated township
project Smondo 2.0 at Neotown, Bangalore. The
company has already sold 1,000 units of its
1,123-apartment first phase of this project —
Smondoville.
GODREJ PROPERTIES TO ENTER
CHENNAI’S PROPERTY MARKET
Financial Chronicle
Godrej Properties is all set to enter the Chennai
property market. It will develop about 12.5 acres
— belonging to Amgalgamations Group
company, Addison Paints and Chemicals — as
a residential apartment complex through a joint
development. The property is located close to
Chembarambakkam on the Chennai-Bangalore
national highway, just after Poonamallee, a
western suburb, whose surroundings have seen
the launch of a slew of new residential projects.
―The firm plans to develop 1,500 residential
apartments in the property. Area of most of the 2
BHK and 3 BHK apartments will range between
1,200 sq ft and 1,400 sq ft. The company will
also have 1BHK studio apartments on offer,‖ a
property consultant said.
700-ACRE TOWNSHIP TO COME UP
NEAR CHENNAI
The Hindu Business Line
The Hyderabad-based IVRCL Assets & Holdings
Ltd has launched a 700-acre township with an
18-hole championship golf course near Chennai.
Announcing the plans at a press conference
here on Thursday, Sunil Reddy, Group Vice-
Chairman, IVRCL, said that the township —
Aavisa — is to come up at Sriperumbudur, off
the NH-4 to the west of Chennai. While the
modern golf course is a unique part of the
project, the residential portion targets a wide
spectrum of the market, with independent
houses priced between Rs 30 lakh and Rs 2.5
crore. Aavisa is promoted through a special
purpose vehicle, IVRCL Resorts & Hotels. Kotal
Realty Fund has a stake in the project. The
master plan for the township is by Townnland,
Hong Kong. The golf course is to be designed
by Golf Plan of the US. The township will be a
LEED-accredited green project, Reddy said.
DLF UNVEILS READY-TO-OCCUPY
LUXURY PROJECT IN CHENNAI
The Hindu Business Line
DLF has launched a residential project with 354
luxury apartments, making it the largest supply,
in this segment, to hit the market at one go in
the heart of Chennai. The project —
Commander's Court — coming up in Egmore on
Commander-in-Chief Road, will have
apartments of 1,600-2,600 sq.ft and duplex units
of 3,950 sq.ft, priced at Rs 1.6-5.2 crore. These
will be fully-fitted units which buyers will be able
19
to move into, with their furniture, and settle down
within a day, said K.K. Raman, Executive Vice-
President and Zonal Head, DLF.
MANJEERA GROUP’S MIXED-USE
PROJECT
Financial Chronicle
Manjeera Group, a Hyderabad-based
construction and real estate company, has
launched an integrated residential-cum-
commercial project called Manjeera Trinity in
Hyderabad. The group has tied up with German
investor-Trinity Capital, a subsidiary of an
European company-Kanam for this project.
Manjeera Group has earmarked Rs 600 crore
for the project that will comprise residential units,
shopping mall and a business complex. The
integrated complex will have a total built-up area
of 1.8 million sq ft and is expected to be ready
by September 2011.
VIPUL LAUNCHES HOUSING SCHEME IN
GURGAON
Financial Chronicle
Vipul, a realty firm in Delhi NCR, has announced
the launch of group housing in Gurgaon.
Christened as Lavanya Apartments, the project
is spread over 10 acres and will carry a
realisation value of Rs 255 crore. The industrial
hubs of Manesar, Bhiwadi and Daruhera
surround the project, located at Gurgaon Sector-
81.
MAHINDRA LIFESPACE'S NEW
INITIATIVE
The Hindu
Mahindra Lifespace, the real estate and
infrastructure development arm of the Mahindra
Group, has launched ‗Californian style'
apartments at Aqualily, the premium residential
community at Mahindra World City, near here.
Aqualily is being developed by Mahindra
Residential Developers Limited, a subsidiary of
Mahindra Lifespace Developers Limited, in a
joint venture with Arch Capital, an Ayala Group
Company, a diversified business group of the
Philippines.
VASCON TO INVEST RS 2,000 CRORE IN
CHENNAI TOWNSHIP PROJECT
The Hindu Business Line
Pune based Vascon Engineers, plans to invest
Rs 2,000 crore to develop a 105 acre township
in Chennai over six-years, a top company official
said. ―We plan to develop a 105-acre township,
predominantly residential, at Oragadam on the
outskirts of Chennai in four phases. In all, we will
develop around 10-million sq ft,‖ Vascon
Engineers‘ Managing Director, R Vasudevan,
said. The project will be developed in a joint
venture with Balakh Realtors and the
association will be on revenue sharing basis,
Vasudevan said. ―They bring in land and equity
and we will do the development,‖ he said.
Construction will start in a year‘s time and Phase
I of the project will be completed in two-and-a-
half years, he said, adding the entire project will
be completed in six years.
20
CENTURY UNVEILS LOW-RISE
PROJECT IN BANGALORE
Financial Chronicle
Bangalore-based Century Real Estate has
launched low-rise project, Century Marvel, near
Hebbal Lake. The project, which is equidistant
from the Airport and MG Road, is surrounded by
educational institutions, IT parks, hospitals and
malls. Century Marvel will comprise 92 limited-
edition apartments comprising two and three
bedroom homes. According to the company,
Century Marvel has been conceived as a gentle
low-rise, rather than as a concrete skyscraper,
and has just four floors. Ravindra Pai, managing
director, Century Real Estate said, ―We are
happy to present these stylish, feature rich
homes in an unbeatable location. Century has
always focused on satisfying our customers and
setting benchmarks in quality and service.‖
21
About Avendus Capital
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Avendus Capital (Avendus) is a leading financial
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Avendus uses its unique domain and industry-
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the advisor of choice for cross-border M&A deals—23
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