- Nichani Group brings decades of investment, financing and real estate experience
- Sobha Group brings the ability to deliver 7 million Sq. feet of developed real estate a year
- Development Consultancy and Sales Services will be provided by Savills
- The new fund targets yield-oriented assets and development opportunities in high growth metropolitan areas of India
India-based real estate leaders Sobha Group has recently joined as a shareholder in RootCorp, an investment manager specialising in global real estate investments. Sobha will be able to deliver multiple large construction projects each year and Nichani brings decades of investment experience. Savills, also a shareholder, will support the manager with development consultancy and sales services.
RootCorp’s latest investment vehicle, the India Debt and Yield Opportunities Fund – with substantial co-investment, in certain projects up to 30% – will focus on the Indian market and have a target IRR of 20%. Rootcorp has the ability to deliver high quality large real estate projects of up to 8 million sq. ft. per annum in multiple sectors - including residential, hotel, commercial and industrial - through the delivery capability of its shareholders and strategic alliance partners.
The urban housing shortage was estimated at around 18.8 million units in 2012; rapid growth in service sectors such as IT and telecoms is fuelling demand for commercial space, and booming consumerism in India is seeing the organised retail sector growing by around 25 – 30 per cent a year(1). A robust domestic tourism industry and the growing global nature of Indian business is fuelling demand for hotels and the hospitality market. The Indian Real Estate sector is expected to increase seven-fold by 2028(1).
Mr Suresh Nichani, Vice Chairman of RootCorp, said: “The fund seeks to benefit from the enormous opportunities which abound in the Indian property sector - India requires a city the size of Chicago to be built every year to house its growing population.”
Rootcorp Investment Management plans to develop further pooled funds, as regulated investment vehicles, that will invest initially in the Middle East and Indian real estate markets, and also renewable energy. Over time, Rootcorp expects between 50% and 70% of assets under management to be outside of India.
RootCorp believes that its experience and skills are a powerful combination which will create a market leading real estate investment management business that can offer unique and attractive investments for both retail and institutional investors.
Sobha will provide unprecedented access to its global pipeline of quality projects and its world-class integrated construction and delivery system. Sobha had revenues of $384m in 2014 in India alone and currently has 49 ongoing residential schemes in India and two major projects in Dubai. Nichani Group was established in India in 1947 and since inception it has invested in excess of $340m (in real dollars) in well over 300 investments including 30 real estate holdings, with a strong focus on South India.
Mr Suresh Nichani, Vice Chairman of RootCorp said: “The vision for RootCorp is to offer the best possible blend of property investment vehicles. At a time of uncertainty in some parts of the globe, demand for property as an investment and asset class in established and successful markets has rarely been more marked. Our aim is simply to offer investors property platforms that will provide superior risk adjusted returns consistently, year after year.”
Mr PNC Menon, Director of RootCorp and Chairman of Sobha Group (Dubai) stated: “Sobha delivers 7 million sq. ft. of property each year in India alone, and we are developing property in excess of $14bn in Dubai. We have the very best land buyers and construction teams in the world and now we are going to increase our activity beyond India and Dubai and use our skill and resources to enter other markets in Europe and beyond.”
Savills, with over 600 offices throughout the Americas, Europe, Asia Pacific, Africa and the Middle East, has an unrivalled market intelligence system that puts it in a prime position to provide support services for RootCorp including consulting, sales and research. Charles Weston-Baker, Savills International Director stated: “The Savills network and strength of research makes its Development Consultancy and Sales Services unique assets to any property investment vehicle and I am confident that we will be able to strongly support RootCorp in both Capital Cities and emerging markets.”
India Debt and Yield Opportunities Fund
The fund will focus on acquiring yield oriented assets and development interests in the high-growth Indian metropolitan cities of Bangalore, National Capital Region (New Delhi) and Mumbai, as well as the Western corridor including Pune and Ahmedabad. The fund will also provide opportunistic capital to reputed mid-size developers who own prime land and projects capable of generating yield. The fund will invest in residential, commercial, smart cities, hotel and special economic zone projects.
In addition to its capabilities, RootCorp has signed co-development partnerships to form several strategic alliance partners in India. The partners are experienced in the development of corporate parks, residential communities, hotels, and highly complex land entitlement processes and will reinforce RootCorp’s existing strengths in local areas. They will also bring proprietary off-market deals and provide a permanent reliable source of advice to the investment manager on a wide range of transactions.
Through Sobha and its strategic alliance partners, RootCorp has the ability to deliver large projects of up to 8 million sq. ft. in multiple sectors including residential, hotel, commercial and industrial.
The India Debt and Yield Opportunities Fund has an IRR target return of 20% and will be accessible to investors in Europe and the Middle East. The fund will have a minimum investment of $10 million for institutional investors and $5 million for family offices and ultra high net worth individuals.
RootCorp Investment Management believes that the Indian real estate market is one of the most attractive in the world. Reasons for this include(1):
· There is huge demand for real estate in India. Around 10 million people migrate to cities every year and a growing economy is driving demand for commercial and retail space
· There is a growing demand for space from sectors such as information technology, defence, logistics, education and healthcare
· Growth in tourism is providing opportunities in the hospitality sector
· In the financial year to March 2015 foreign direct investment (FDI) grew to $34.9bn an increase of 61%. FDI in Indian construction development was $23.4 billion between ApriI 2000 and April 2014. Between April 2012 and January 2013 the real estate sector accounted for 8.8% of total FDI inflows into India
· Supportive Indian Government policy e.g. allocation of funds for rural housing and to provide cheaper credit for affordable housing
· Smart Cities – The Modi Government recent announced funding for a ‘Smart City’ initiative aimed at fast tracking urban development and providing a plentiful supply of both homes and places of work.
· Special enterprise zones - the government has formally approved 576 special enterprise zones of which 173 are in operation
For more information please contact:
Phil Anderson/Emma Murphy, Citigate Dewe Rogerson: 0207 282 1031/1072
Charles Phillpot, RootCorp Investment Management:
Office: +44-20-3372-4177 & +1-917-470-9170
Corporate website: www.rootcorp.com
Savills - Charles Weston-Baker
Office: +44-20-7016 3740
Nichani Group - Suresh Nichani
Office: + 1-212-873-1194
The elements contained in this document have been prepared solely for the purpose of information and do not constitute an offer, in particular a prospectus or any invitation to treat, buy or sell any security or to participate in any trading strategy. This document is intended for press use only. While particular attention has been paid to the contents of this document, no guarantee, warranty or representation, express or implied, is given to the accuracy, correctness or completeness thereof. Any information given in this document may be subject to change or update without notice. Neither RootCorp nor any other company or unit belonging to the joint venture nor any of its officers, directors or employees can be held direct or indirectly liable or responsible with respect to the information and/or recommendations of any kind expressed herein.
Note for Editors:
(1) Analysis of India Brand Equity Foundation Real Estate presentation (March 2015)
RootCorp shareholders are Nichani Group, Sobha Group, and Savills who will support the manager with development consultancy and sales services. Together all parties provide a trusted, compelling and long term platform for global investors who wish to invest in Indian and Middle Eastern real estate and infrastructure through regulated investment vehicles managed by RootCorp.
To enhance its pipeline across the target markets, RootCorp is further adding to its partner network, and secure preferred access to off-market transactions and to receive field level intelligence with several well-known development companies.
Sobha Developers Ltd.
Mr. PNC Menon founded Sobha Developers Limited in India in 1994, with Bangalore as its headquarters.
From building monarchical palaces, luxurious villas and hotels in the Middle-East, in 1994 Sobha entered the India market and revolutionized the industry by introducing world-class quality construction with a focus on timely delivery. It has since launched numerous real estate projects.
Today Sobha is a multinational, multiproduct group with significant interests and investments in the U.A.E., Sultanate of Oman, Qatar, Bahrain, Brunei, Tanzania and, of course, India.
Sobha prides itself on being a uniquely fully backward-integrated company, including real estate development, contracting, construction, metal working, building services, manufacture of construction materials, architectural and engineering design, consultancy, retail, and software.
In 2006, Sobha went public through an initial public offering that was oversubscribed by a record 126 times.
As of 31st December 2014, Sobha had completed 98 real estate projects and 258 contractual projects covering about 6.31 million square metres. The company currently has 49 ongoing residential projects aggregating to 2.90 million square metres of developable area and 28 ongoing contractual projects aggregating to 0.8 million square metres.
Sobha has made a footprint in 24 cities and 13 states across India and is now directing its efforts to London and other Capital Cities. Sobha has more than 28,000 employees across the globe.
Savills plc is a global real estate services provider listed on the London Stock Exchange and a member of the FTSE250 group of companies. The Group has revenues in excess of U.S $1.61 billion through its international network of more than 600 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East.
The Nichani Group was established in 1947 and is a significant business house in South India with a presence in four cities.
Since inception the Group has invested in excess of $340m (in real dollars) in a total of 300 investments including 30 property holdings with an average IRR in excess of 20%.
In addition to property investments Nichani has made several strategic land acquisitions in order to add value by achieving change of use.
The Nichani Group acts as both as an investor and financier with many South India enterprises. Key to their success is the Group’s extensive connections with local business & political communities.