Deutsche Bank exits Lodha with 55% returns

Deutsche Bank has got a 55% return on its Rs1,640 crore placement in Lodha Developers, despite having invested at the peak of 2007-08. The lender got back Rs2,542 crore — including fresh debt of Rs825 crore and Rs1,720 crore from internal accruals — from Cowtown Land Development Ltd, a Lodha subsidiary.

Lodha, which has earlier provided exits to JP Morgan and HDFC Venture Fund from its other projects, currently has investments from the likes of ICICI Ventures and Old Lane, besides HDFC Venture Fund.

Earlier this year, private equity firm Kotak Realty Fund took the promoter buyback route to exit its stake in 3C Company’s information technology park project in Noida. The investment firm said it earned a return of less than 30% from this exit.

With most funds nearing expiry of their term and investments getting matured over the years, industry experts feel 2012 and 2013 will see a good number of transactions in the real estate space.

“When the fund expires, private equity (PE) firms have to return a significant amount of money to investors. Besides, demonstrating returns is very crucial if one is raising a new fund. Given the current market situation, deliberated and negotiated exits will be more in number as compared to natural exits, wherein the latter (natural exits) would see superior returns,” said Amit Bhagat, chief executive officer and managing director, ASK Property Investment Advisors.

Jones Lang LaSalle said in a report recently that 2012 will be a big year for real estate exits by private equity players. It sees PE exits worth $2.5-3 billion (around Rs15,840 crore) this year — that’s equivalent to the total quantum of PE exits in the last four years.

According to Shobhit Agarwal, joint managing director - capital markets, Jones Lang LaSalle India, multiple investments took place in the 2005-2008 period involving both domestic and foreign funds.