PE Inflows in India Realty Up 19% in FY21

Against all expectations, Indian real estate recorded its highest-ever PE investments since FY16. ANAROCK Capital's 'Flux – FY20-21 Market Monitor for Capital Flows' highlights that despite COVID-19, more than USD 6.27 billion were pumped into the sector in FY21, as against USD 5.8 bn in FY20 - an increase of 19% in one year. Unlike earlier, FY21 saw private equity investors focus majorly on portfolio deals across multiple cities and assets, rather on specific projects or cities. Such portfolio deals constituted 73% of the overall share, with approx. USD 4,583 million invested via portfolio deals in multiple cities The average ticket size of PE deals rose by 62% in the fiscal year – from USD 110 Mn in FY20 to USD 178 Mn in FY21. Both structured debt and equity witnessed strong growth during the year at 84% and 15% respectively. Structured debt was largely towards portfolio deals instead of project-level assets. Though FY21 was an unprecedented year due to the pandemic, foreign PE funds showed much optimism for India. As much as 93% of the total PE investments pumped into Indian real estate was by foreign investors. In actual terms, investments by foreign PE funds almost doubled from USD 3 Bn to USD 5.8 Bn in FY21. In contrast, domestic PE funds invested merely USD 300 Mn compared to USD 420 Mn in FY20. Among other significant trends, the share of asset classes like commercial, retail and hotel has been very good. While the asset class-wise bifurcation shows lower percentage, when considered along with portfolio deals (where bifurcation is not available), the share of these assets classes is strong. Nearly 66% of the total inflows (USD 6.27 bn) in FY21 was across portfolio deals in multiple asset classes. In contrast, in FY20, out of the total USD 5.28 Bn total inflows, just 8% of the total comprised of portfolio deals.