Townsend Group backs KKR's India real estate NBFC
KKR has signed up another partner for its India-focused real estate non-banking finance company (NBFC), with US-based investor The Townsend Group agreeing to commit capital.
The NBFC is sponsored and managed by KKR and has GIC Private as a lead investor. It provides structured credit solutions to property developers, filling a funding gap created by restrictions on banks' exposure to certain areas within the real estate sector and capital markets that are difficult for developers to tap.
KKR moved into the space for three primary reasons: a belief that India's real estate sector remains under-built, particularly on the residential side; greater credit market participation in the sector; and the desire of many developers to upgrade from informal financing to institutional capital.
For Townsend, it was an opportunity to participate in a sector that lacks long-term capital but is benefiting from strong urbanization trends, according to a release.
"This additional long term capital allows the real estate NBFC to better fulfill a critical market need by assisting developers with solutions best suited to their needs. KKR continues the strategic build out of its real estate financing platform, leveraging its local and global real estate expertise in structuring and underwriting real estate solutions," said Sanjay Nayar, India CEO at KKR.
Using balance sheet capital, KKR set up its India NBFC in 2009 to provide structured credit solutions to entrepreneurs. It has extended more than $2 billion in structured financing to over 20 business groups.
The real estate NBFC targets opportunities such as: fixing capital structures for project or companies, providing interim working capital where cost overruns or delays have created liquidity shortages, and facilitating exits for existing lenders or investors.
Many of India's generalist NBFCs are also prolific lenders to the real estate sector. The likes of Everstone Capital, Temasek Holdings and Clearwater Capital Partners have either set up or invested in NBFCs.
Townsend is a global investment manager across real estate, infrastructure, timber and agriculture. As of year-end 2014, it had approximately $12.5 billion in assets under management and provided advisory services to clients with real estate and real asset allocations exceeding $170 billion.
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