KKR to step up real estate financing in India

REUTERS/Brendan McDermid

Real estate-focused non-banking financial company (NBFC) KKR India Asset Finance Ltd (KIAFL) is stepping up lending even as overall financing to the sector remains subdued, said a top executive.

KIAFL, the local arm of private equity firm KKR & Co., was set up in 2015 to focus on lending to residential projects in top cities, and has invested a little under $2 billion since then.

This year, it has invested around $60 million across four deals, including top-up financing to Lodha Developers. It is also in the process of closing a deal with a Bengaluru-based developer.

It has so far invested $175 million in Lodha’s residential and commercial office development assets since 2016.

“We are consolidating our market position by stepping up our lending activities and expect overall margins to be higher. We also think that the residential market will continue to bottom out and stage recovery in the next few quarters, thereby presenting a good risk-return proposition for investors,” Yesh Nadkarni, MD, real estate, KKR India said in an interview.

Nadkarni said there’s been a significant upheaval in the landscape for real estate NBFCs posing a challenge for many market players.

“…But the current environment presents a meaningful opportunity for KKR India Asset Finance Ltd to scale its business further, given the quality of our balance sheet and the reaffirmed credit rating. We continue with our objective to build up our book and make more investments,” he said.

“…KIAFL over the past three fiscals, has grown its loan book to reach 3971 crore as on 31 March, 2020, compared to around 3735 crore a year ago. On the funding side, the company has managed to raise 550 crore in fiscal 2020 through traditional bank lines. In terms of liquidity, it remains adequate, Crisis said in its rating note.

Despite the volatility in the sector, there is currently a chance for investors who want to focus on this space to gain market share, KIAFL being one of them, Nadkarni said.

“Since July, our real estate-focused NBFC has received two new lines of bank funding, and there is an ongoing opportunity to receive more. Banks recognize the volatility but are not shying away from lending to NBFCs,” he said. “We’ve strategically decided to be even more prudent in our balance sheet management in recent years, including obtaining long-term funding lines to help us navigate this dynamic landscape.”

This article was first published on livemint.com.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.