Delhi based real estate firm Emaar MGF Land Limited raises private equity funding of Rs.250 crore from Kotak Realty Fund for its residential projects

Kotak Realty Fund, part of the larger Kotak Mahindra Bank reported that it had invested $53.6 million, about Rs 250 crore, in twin realty projects operated by Emaar MGF Land Ltd. Kotak Realty Fund is a unit of the Indian financial services major, Kotak Mahindra Bank and in a press statement, the firm was quoted saying it had invested in Emmar MGF’s residential projects in Gurgaon, said V Hari Krishna, Kotak Realty Fund director, an interview with Reuters.

Kotak undertook the investment in two of Emaar properties, namely the Emerald Estates and Palm Terraces, both found in Gurgaon. According to Kotak, the investment was undertaken using its domestic fund, that has about 16 billion Indian rupees, said the director. Kotak Realty Fund reiterated that the investment, being a presold project and thus portending minimal risk, gives it a chance to take part in the high growth Gurgaon market, Krishna added.

Emaar MGF Land Ltd is a joint venture owned by Indian lender MGF and Dubai based Emaar Properties. The Dubai based Emaar Properties is best known for its Burj Khalifa tower in Dubai, currently the tallest building globally. Back in April, Emaar Properties announced that it was planning to launch a $770 million initial public offering within three months, but the move has been hampered by an apathetic stock market and slowing property sales after a sharp run in prices in 2010.

Emmar MGF Land Ltd is based in Delhi and it confirmed having raised private equity funding of Rs 250 crore from Kotak Realty Fund for its residential projects. Emaar is developing about 2.7 million sq. ft of residential space in these two projects and nearly 85% of this has been sold already, making Kotak's investment relatively risk-free. The projects are expected to be completed in around three years.

Currently, Emaar MGF, which commenced operations in India in February 2005, has 36 projects under construction in the country. Emaar had outstanding loans of Rs. 5,808 crore as of August 2009 and has to repay Rs. 2,000 crore by March next year. The firm is thus looking at different fund-raising options including selling non-core assets such as 9-10 proposed hotel properties.

Emaar had planned to raise funds for the second time in 2009 but was hampered by investor moves to shun the realty sector due to perceived unreasonable valuations as prices sharply jumped and supply increased.

12 Sep 2010.