ASK invests in ATS Group

Bangalore/New Delhi: Private equity (PE) firm ASK Property Investment Advisors Pvt. Ltd has invested Rs.147 crore in a residential project to be developed by ATS Infrastructure Ltd on the Dwarka expressway near New Delhi.

The deal is the PE firm’s fifth investment from the Rs.1,000 crore it raised last year for the ASK Real Estate Special Opportunities Fund. The transaction was closed 10 months after the fund invested Rs.100 crore in Shriram Properties Pvt. Ltd’s Bangalore project and a similar amount in a project of Mantri Developers Pvt. Ltd just before that.

Sunil Rohokale, group chief executive of ASK group, said the deal is in line with the focus of the fund, which is to invest in affordable, residential projects with reasonable turnaround time. ASK invested in the Dwarka project at the land acquisition stage. The 11.5 acre of land will generate 1 million sq. ft of saleable area; the final building plan approvals are awaited and the project’s expected to be completed in three to four years.

This is ASK’s second investment in an ATS Infrastructure project. It put in Rs.50 crore in 2010 in the latter’s Noida project and exited two years later with returns of 2.5 times.

“Our confidence in ATS stems from the fact that ATS is able to fetch premium due to superior execution and delivery track record,” said Amit Bhagat, chief executive and managing director, ASK Property Investment Advisors.

“It is a win-win situation for both the parties. Raising money investors has been a prevalent and a very healthy practice in real estate,” said from PE Getamber Anand, chairman and managing director, ATS Infrastructure. “We will use the money partly for buying land and partly for the development of our project (on Dwarka expressway). This is a residential project for which we will start development in next three months.”

Real estate funds committed around $805 million (Rs.4830 crore) to the sector in the first half of 2013 across 27 transactions, up 40% from the same period last year, according to VCC Edge that tracks investments. Real estate developers are looking at alternate sources of funding such as PE investors, wealthy individuals and non-banking financial companies (NBFC) for capital with bank lending becoming scarce.

Gaurav Karnik, partner, tax and regulatory services, at consulting firm EY (formerly Ernst & Young), said a number of projects are coming up on Dwarka expressway, leading to demand building up in the area and prices appreciating.

Investors are betting on the connectivity between Dwarka expressway and Gurgaon, the main factor boosting property prices in the area, he said.

“Investors are also showing more interest in completed assets such as IT (information technology) parks or rental assets rather than developing assets,” said Karnik.

After the ATS deal, another Rs.450-500 crore remain to be deployed from ASK’s second fund, of which Rs.300 crore will be invested this fiscal year.

ASK is also raising a new $200 million offshore fund, based out of Singapore. Raising money from offshore investors has been slow and difficult in general, but ASK plans to raise an initial $75-100 million by September, said Rohokale.