birla real estate investor presentation[1]
Post on 10-Apr-2015
317 Views
Preview:
TRANSCRIPT
Birla Sun Life Asset Management Company Ltd.
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Real(i)ty - Indian Real Estate, back on track
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd. 2
High liquidity at
low rates
Highest levels
of land buying
recorded
The REAL ESTATE journey
Real Estate – Emerging steadily from the slump
Glory Despair Recovery
2006-07 2007 -08
Rise in
mortgage rates
Rise in prices
due to over
supply
2008 -09
Depressed
demand, low
sales
Lack of trust
about pricing
and delivery of
projects
2009 -10
Enough signs of easing
liquidity
Increase in off take with
stability appearing in prices
After a course correction, Back on track
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd. 3
Current property prices present a great opportunity to investors. A peak is expected in the next 3~5
years making real estate an attractive investment option.
The residential segment will lead the sector’s recovery:
New players are expected to enter the market with properties designed keeping in mind
current economic conditions and consumer preferences
Focus of real estate developers is the affordable housing segment which makes up 50% of
the total market currently.
Estimated Real estate market size – 2009-2014
Real estate growth –
expected at a CAGR of 26% till 2014
0% 20% 40% 60% 80% 100%
Office
Retail
Residential
Hospitality
15
15
17
10
10
17
18
20
25
19
20
20
25
26
23
26
25
23
22
24
2009 2010 2011 2012 2013
7.5 million units
Sector wise demand projections – 2009-2013
>43 million sq. feet
> 196 million sq. feet
6,90,000 room nights
Cushman and Weikfeild 2009 reportResearch and markets
Business Standard
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd. 4
• Evident signs of increasing investment activity in
the real estate sector
• USD 15 billion, the sum raised by real estate firms
in the past six months through QIP’s.
• 20 -25, the expected number of IPO’s from real
estate firms in the forthcoming six months.
• Emmar, Godrej properties, DB realty together plan
to raise USD 1.8 billion through IPO’s.
• Unitech and DLF, the top two of the ten firms
receiving maximum FII in the Q2 2009.
The best time to invest in this asset class
FDI Inflow
(USD million)2006-07 2007-08 2008-09 2009 -10 (E)
Cumulative
(2006 – 2009)
Housing and real estate 467 2179 2801 1181 6628
India tops the BRIC nations Real Estate Transparency Index says Jones Lang LaSalle as per
their 2008 report. Investors looking at India as a long term investment destination can be confident
Indian Real Estate Index – 2009
Source: BSE India Website
Source: Cushman and Wakefield 2009 report
Birla Sun Life Asset Management Company Ltd.
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Residential realty – The juicy bit
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd. 6
* September 2009 report
Source: Cushman and Wakefield, September 2009
• Demand for residential realty to reach 7.5
million units by 2013*.
• Highest cumulative demand will be seen by
Mumbai (1.6 million units). Bangalore and
Hyderabad to witness highest CAGR at 14%.
• Urbanization, development of city suburbs,
increasing nuclear families and rising income
levels to be the key demand drivers
• Prize rationalization, reduced costs of
borrowing, government sops etc. and,
increasing focus on affordable housing all
contributing to renewed demand. Most
developers are increasing their portfolio to
include affordable housing
Residential realty demand pegged at
7.5 million homes by 2013
Residential Real Estate Demand - in units
(2009-13)
Birla Sun Life Asset Management Company Ltd.
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Your best bet to Gain – The ADITYA BIRLA group
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
Your Partner in Value Creation –
The Aditya Birla Group
Fortune 500
Company
Presence in 25
Countries
Global Turnover of
USD 28 billion
One of India’s
Oldest Business
Houses
Employs More
Than 100,000
People
Awarded India’s
Best Employer
Leadership across
businesses
Has a Dedicated
Financial Services
Group
Presence in
Insurance, Asset
Mgt., MFs
Joint Venture with
Sun Life
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
Birla Sun Life Asset Management Co.
A JV between two stalwarts
9
Birla Sun
Life Asset
Management
Company
A Joint Venture between the
Aditya Birla Group and
Sun Life Financial
Services Inc. of Canada
Investment manager of one
of the India's leading
Mutual Funds - Birla Sun
Life Mutual Fund
An amalgam of Aditya Birla
Group’s strengths in
the Indian Market and, Sun
Life's global experience
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
One of the best teams in the industry (1/2)
Alumnus of one of India’s leading B-schools
Experience of 18 years in Business; 10 years in
Indian Realty and related businesses
Founder member of India REIT as Chief
Investment Officer (Ajay Piramal group RE Fund)
Has successfully completed an investment cycle –
Fund raising – Deployment – Exit
Managed funds – Domestic: INR 10 billion;
Offshore: INR 25 billion
Headed Real Estate expansion at Shoppers Stop
and related business at Landmark, India REIT and
now, Birla Sun Life AMC
Shashi Kumar,Head Real Estate
10
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
One of the best teams in the industry (2/2)
Chartered Accountant with 20 years
experience
15 years in Lupin Group in Corporate
Finance, Projects, Mergers and
Acquisitions with global exposure,
reporting to Head Finance
Deputed to group’s Real Estate
business for 6 years, heading Finance
and Legal functions with exposure to
evaluation and negotiation
Wide experience in deal structuring,
due diligence, closing and post
closing compliance and integration
Jagannath Shetty, CFOShekhar Rangaraj, Head
Business Development
More than 20 years of experience in
Business Development and Channel
Management
10 years of international exposure of
dealing with luxury brands
Instrumental in launching the Indian
sojourn of renowned luxury brands
and enlightening them on the Indian
consumer psyche
Well exposed to dealing with HNI’s
11
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
Primary focus: Mitigating risk exposure and…
Guidelines for
Investments
Caps on Exposure to Limit Risks:
Single Project: 15%
Overall exposure in a single group: 30%
Single City (Metros): 50%
Non metros: 30%
Yield based investments: 15%
Above caps to be reviewed periodically by Investment Committee
12
Principles for Investments
Investment focus on residential realty, the
most attractive segment
Invest in mid-tier developers’ top-grade
projects
To maximise value for investors, investments to
be milestone/target oriented
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
…spreading our investments evenly.
Location Focus on the highest potential geographies
High potential cities such
as Mumbai Bangalore,
Chennai, Hyderabad and
Pune
Primary
Focus
Secondary focus will be on
cities such as NCR region
and Kolkata
Investment Strategy: Focus on Residential Realty
Secondary
Focus
Developers are looking
for alternative sources
of funds, as funds from
banks have dried up,
leading to an increase
in opportunity
13
Has long-term demand potential as evidenced earlier
Is the safest investment domain in the realty
Demand is picking up steadily and, consolidating
Government support for the sector is most evident in
public sector banks leading with low cost of housing
finance in addition to a slew of other measures
Has shorter cycle time and hence quicker completion
of projects
Early returns on investments a distinct possibility
Residential
Realty
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
…and creating value for our customers…
Delivering significant Value
Advantages of Associating with us
Benefit of the
values and
commitment of
India’s leading
conglomerate
Assurance of
expertise from a
team having a
successful track
record in this
sector
A hurdle of 10%
Profit sharing of
80:20
An expected IRR
of 20%
14
The Investments will be made after conducting an exhaustive assessment/evaluation of all critical criteria
The appraisal and decision making processes of the team will not only be prompt but also clearly communicated
Once a decision to invest is reached, it will be
followed by putting forward clear terms, including
approval on key decisions
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
...through a strong process driven approach to
investments
Step 1: Filtration Sector evaluation
Pre-feasibility studies
Step 2: Due Diligence and
Valuation
Engaging 3rd party experts
Conducting due-diligence
Low cash out
Downward protection
‘Early stage’ entry
Well-defined exits
Step 3: Entry strategy
Clear land title
Established sanction feasibility
Multi-tier Investment Committee approval
Definitive agreements with in-built veto & monitoring rights
Step 4: Validation and Legal
Compliance
Step 5: Financial Close Tax-efficient structuring
Optimal debt planning
Step 6: Project Execution
Value-addition in planning, construction, marketing
Periodic monitoring and reporting mechanisms
Milestone driven disbursements
Tracking of market conditions
Strategic equity sale
IPOs /REITs/REMFs
Self-liquidating SPVs/Pre-sales
Step 7: Exit
15
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
Now, The Product
Summary of Key Terms
Fund Name Aditya Birla Real Estate Fund
Fund Size INR. 750 crores with a green shoe option of INR 250 crores
Fund Tenure 6 years with two 1 year extensions
Minimum Commitment Individual Investor – INR 2,500,000; Institutional Investor – INR 100,000,000
Initial Draw-down Amount 20% of the total commitment
Draw-down Notice Period 15 business days
Initial Closing Minimum corpus of INR 500 crores
Investment Term 3 years from date of Initial Closing
Hurdle 10% p.a. calculated in INR
Carry 80:20 [80% to investor] with catch-up
Management Fees
2% p.a. of the total commitment amount during investment period and 2% p.a. of
the residual capital commitment thereafter (Total draw downs less cost of
investments sold) . One time set up fee of 3% of capital commitment
Auditor/Custodian Deutsche Bank/Ernst & Young
Counsel Nishith Desai Associates
16
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
Distribution of Proceeds - Details
17
Disbursement Schedule - Details of payout
First Payout 100% of Paid-up Capital Commitment
Second Payout 100% of Hurdle @ 10%
Third Payout Catch up to Investment Manager
Final Payout Balance Distribution:
80% to Investor
20% to Investment Manager
For better understanding of the above, illustration is given below (for a one year horizon)
Capital Commitment 100
Fund Realization 200
Disbursement Schedule
First Payout 100% of Paid-up Capital Commitment 100
Second Payout 100% of Hurdle @ 10% 10
Third Payout Catch up to Investment Manager 2.5
Final Payout Balance Distribution:
80% to Investor 70
20% to Investment Manager 17.5
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
What makes us and our product unique?
REAL ESTATE - A sector poised to take a huge step forward,
an opportunity in waiting
THE BRAND - Aditya Birla Group, one of the must trusted names in India
THE TEAM – Has extensive real estate experience and a proven track
record
The PRODUCT – Focussed on the most attractive, potential segment,
RESIDENTIAL realty
Product Highlight - Designed for maximum downside protection, flexibility
and easy exits
18
Copyright: Birla Sun Life Asset Management Company Ltd. 2009
Birla Sun Life Asset Management Company Ltd.
DisclaimerThis document is being furnished to you by BIRLA SUNLIFE Asset Management Co. on behalf of Aditya Birla Real
Estate Fund strictly on a confidential basis. This document is for informational purposes only and does not
constitute an offer for participating in the proposed Fund. This information profile has been provided to its recipient
upon the express understanding that the information contained herein, or made available in connection with any
further investigation, is strictly confidential and is intended for the exclusive use of its recipient. It shall not be
photocopied, reproduced or distributed to others at any time without prior written consent. This document is neither
a prospectus nor an invitation to subscribe to units. Prospective Contributors and/or investors should carefully
review the underlying Constituent documents of the Fund before making a decision to invest. In general, investment
in the shares of the Fund will involve significant risks. Nothing in this document is intended to constitute legal, tax,
securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any
product or service. The use of any information set out in this document is entirely at the recipient’s own risk.
Contributors are advised to seek independent professional advice to understand all attendant risks attached to
investments in the Fund. Also, Contributors should have the financial ability and willingness to accept the risks and
lack of liquidity, which are characteristics of the investments described herein. In making an investment decision,
investors must rely on their own examination of the documents and the terms of the Offering to be set out in detail in
a separate document, including the merits and risks involved.
While reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at
the time of publication, BIRLA SUNLIFE Asset Management Co. makes no representation as to its accuracy or
completeness. The information herein is subject to change without notice. Neither BIRLA SUNLIFE Asset
Management Co. nor any of its officers or employees accept any liability whatsoever for any direct or consequential
loss arising from any use of this publication or its contents.
The facts and figures used in this presentation reflect the latest available information and have been sourced from
various reports in leading newspapers, IBEF, Reserve Bank of India, Deutsche Bank Research, Report on Indian Real
estate and, BIRLA SUNLIFE research and other sources that are in public domain.
19
top related