Merrill Lynch’s private equity real estate fund has invested $377 million (€255 million) for a 49 percent interest in Indian housing projects being built by DLF, India’s largest real estate company.
The special purpose vehicles are developing seven mid-income housing township in Chennai, Banglore, Kochi and Indore, according to DLF. These projects will be developed in seven to eight years.
The investment, one of the biggest of its kind in India, is Merril Lynch’s sixth in Indian real estate, and brings its investments in the sector to about $550 million.
The investment is just the latest in a rush of foreign firms investing in Indian real estate since the government relaxed restrictions on foreign investment in the sector in 2005. Last month, JP Morgan committed $25 million to an IT park development in Navi Mumbai through its $360 million India-focused investment vehicle. In August, the Blackstone Group announced it was investing $150 million in Nagarjuna Construction Company, the third largest construction company in India. Singapore’s Government affiliated investment Temasek Holdings, Warburg Pincus and the Carlyle Group have also invested in the real estate and infrastructure sectors.
According to Indian government estimates, real estate and infrastructure have the capacity to absorb as much as $300 billion over the next five years.