Merrill Lynch has launched its biggest foray into India’s real-estate market, joining a growing number of foreign financial institutions seeking to tap into the fast growing but volatile sector. Financial Times.
The US bank is paying about $377m for a 49% share in a portfolio of residential projects managed by DLF, the country’s largest listed developer, in one of the biggest deals of its type in India.
Wall Street investment banks have descended on India’s real-estate sector looking for opportunities since the government relaxed rules governing foreign investment in 2005.
Participants range from the proprietary arms of investment banks, such as Goldman Sachs’s real estate fund, Whitehall, to specially established Indian real estate funds.
Indian developers have also raised more than $7bn on India’s stock market and London’s Alternative Investment Market since August last year, according to estimates by Ernst & Young and the Federation of Indian Chambers of Commerce and Industry.
DLF said Merrill Lynch was buying the stake in seven “mid-income” residential projects spread across Chennai, Bangalore and Kochi in southern India and Indore in the north. The projects would take seven to eight years to complete.