Mumbai: While most private equity (PE) funds in real estate are struggling with exits, ASK Group seems to be bucking the trend.
ASK Property Investment Advisors, the realty fund management arm of ASK Group, had invested Rs 30 crore in a project of Amit Enterprises at Baner in Pune. And, it successfully exited with 2.5 times returns at Rs 75 crore. Similarly, it made 1.8 times returns in Paranjape's premium project Skyone at Model Colony in Pune, where it had invested Rs 40 crore.
"Location, entry price, partner and risk management framework are important factors in achieving returns," said Amit Bhagat, managing director (MD) and chief executive officer (CEO) , ASK Property Investment Advisors.
Explaining the importance of location, Bhagat said, "Both the projects were at excellent locations. While Model Colony is a city centre and commands prices of Rs 14,000-17,000 a sq ft, Baner is fast developing."
Thanks to these exits, ASK returned Rs 350 crore to its investors, which is more than the Rs 317 crore raised.
According to Bhagat, ASK's strategy of sticking to top six cities (Mumbai metropolitan region, Delhi national capital region, Bengaluru, Chennai, Pune and Hyderabad), investing only in asset-level special purpose vehicles and in residential projects in city and suburban limits yielded the results.
Amit Goenka, MD and CEO of Nisus Finance Services says many projects are stuck. "Fund managers are exiting one in 10 projects. Basically, PEs are asking their investee companies to borrow at 17-18 per cent and replace them with debt."
Many PE fund managers have exited with loss. For instance, IL&FS exited some of its investments in The Phoenix Mills projects at a loss, according to reports.
"A lot of capital went to developers with bad positioning and over-priced projects. If you have invested with B and C players, you are stuck. Similarly, if you are invested with over-leveraged developers in Mumbai who are battling slowdown, you are stuck," said Sanjay Dutt, managing director, Cushman & Wakefield.
"Exits are becoming tougher as sales are not happening. Service tax and statutory levies have gone up... Bank dues have to be paid. Hence net surplus is less," said Goenka.