Singapore’s sovereign wealth fund GIC Pvt Ltd, has quietly built a significant presence in India with small stakes in large public listed firms. The GIC has made much of the investments in India as a portfolio investor by purchasing shares through the stock market. The company has also signed private equity style deals in India and has committed close to $ 1 billion in the last year.
The company has been aggressively investing in real estate apart from pharmaceutical research, e-commerce, renewable energy and microfinance. GIC is now the top institutional investor in real estate sector. The USP is the understanding of the market due to long-term patient capital investment and the ability to sign big cheques.
It recently sealed a deal with India’s biggest listed developer DLF Ltd to invest Rs 1,990 crore across two projects in central Delhi, acquired roughly 64 per cent of listed Mumbai IT park firm Nirlon Ltd, and, in a small transaction, backed residential projects of Chennai-based developer Jain Housing and Construction.
It has forged a Rs 1,500 crore venture with Bangalore-based Brigade Group to jointly develop residential projects in southern cities. It also struck a joint venture agreement with Vatika Group to develop two projects.
Apart from sealing direct deals with developers, it has also backed the real estate-focused non-banking finance company formed by private equity giant KKR.
GIC has seen a variety of deals across commercial and residential segments, though most of its assets are residential. These range from platform deals and entity-level deals to transactions involving special purpose vehicles (SPVs).
Platform deals refer to transactions where an investor joins hands with a developer to create a string of assets while entity-level deals, which are making a comeback, involve the holding company of the developer bringing in an equity investor. SPV-level transactions involve an investor backing a particular asset.
Depending on the risk-return profile, they are able to safely move from one strategy to another. GIC has increased its portfolio of global real estate assets from 7% to 13%. The strategic advantage is that real estate offers the opportunity for diversification to GIC together with good returns.