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Covid-19 impact: Realty, poised to bounce back, forced to stall deals

MUMBAI | BENGALURU: The Covid-19 crisis has forced dealmakers to hit the pause button on multiple transactions that were in advanced stages of negotiations and were expected to be closed by the end of the current financial year.

Before the Covid-19 outbreak, the real estate sector was set for a phase of consolidation and the institutional investors were actively scouting for opportunities.

Several realty firms with limited access to liquidity and customer advances had already entered into joint ventures and development management agreements with relatively deep-pocket partners.

“Everything is on wait and watch mode. Almost all key decision-makers have hit the pause button on transactions. We can take a call on deals that originated even before the outbreak of Coronavirus, only after the scenario stabilises.

“It’s not only about travel restrictions but also to do with the impact of current developments on economic growth projections,” said Ambar Maheshwari, CEO, Private Equity Funds, Indiabulls AMC.

Maheshwari had two live deals that were at advanced stage of discussion before the Coronavirus mayhem started and were expected to be concluded by March end.

Apart from Indiabulls Asset Management Company’s private equity fund, some of the other funds and companies that were actively discussing deals include Tata Realty & Infrastructure, Mapletree Investments and Prestige Estates.

Transaction advisors and dealmakers are of view that these transactions would be picked up only in the second half of the year provided the situation stabilises over the next quarter or two. But the valuation of assets will hit and assets will be revalued in the backdrop of revised economic growth outlook.

“It is inevitable for those private equity firms who believe in medium to long term, to find the valuation even more attractive…I expect second half of the year to witness gradual flow back to markets,” said Sanjay Dutt, CEO, Tata Realty & Infrastructure.

March 31, 2020

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