Realty PE funds raked in $11.2 billion in April-June: Preqin

According to a study by research firm Preqin, 18 private equity funds dedicated to the real estate raised an aggregate $11.2 billion in the second quarter of 2011 as compared to $8.9 billion in the March quarter

New Delhi: Real estate-focused private equity funds raised $11.2 billion from investors in the April-June period of 2011, 26% more than in the January-March quarter, reports PTI.

According to a study by research firm Preqin, 18 private equity funds dedicated to the real estate raised an aggregate $11.2 billion in the second quarter of 2011 as compared to $8.9 billion in the previous quarter.

The June quarter mop-up was much higher than the $7.1 billion raised in the fourth quarter of 2010.

"As deal levels increase and as a result more distributions occur, investors will have more capital available to make new commitments, which is likely to further improve fund raising.

"This will be a gradual improvement, and with the market remaining extremely overcrowded, many firms will still be facing long periods in market and others will be forced to abandon their fund raising efforts," Preqin manager (real estate data) Andrew Moylan said.

In terms of geography, five private equity firms in Asia raked in $1.4 billion, while three Europe-focused funds garnered $1.2 billion.

Funds with a primary focus on North America mopped up the most capital, with 10 such funds receiving an aggregate commitment of $8.6 billion.

The most successful private equity fund during the quarter in terms of fund-raising activities was Lone Star Real Estate Fund, which mopped up $5.5 billion, followed by Och-Ziff Real Estate, which raised $840 million, and Pramerica Real Estate Capital I, which attracted $786 million.

"Several funds that closed in the quarter did so above target, again indicating that fund raising success is possible in the current environment," Mr Moylan added.

There are currently 435 private equity real estate funds in the market, targeting aggregate commitments of $138 billion in the third quarter of 2011. This is a small decline in comparison to the quarter ended 31 March 2011, when 439 funds were targeting $160 billion.


TNPCB issues closure notice to Orchid Chemicals’ Chennai plant

The state pollution control board cited non-compliance with regard to the disposal of solid waste as reasons for issuing the closure notice

New Delhi: Orchid Chemicals & Pharmaceuticals today said its Chennai-based manufacturing facility has been issued a closure notice by the Tamil Nadu Pollution Control Board (TNPCB), reports PTI.

The company's Cephalosporin producing facility at Alathur in Chennai was issued a closure notice by the TNPCB citing some non-compliance with regard to the disposal of solid waste, Orchid Chemicals & Pharmaceuticals said in a filing to Bombay Stock Exchange (BSE).

"The company is in active dialogue with the TNPCB officials and is confident of resolving the issues and bringing the plant to a fully operational stage at the earliest," it added.

Last month, the US health regulator had inspected and cleared Alathur facility, paving the way for continuous supply of active pharmaceutical ingredients (APIs) from the plant to the global markets.

The Alathur facility manufactures a range of oral and sterile Cephalosporin APIs and caters to developed markets like the US, Europe and Japan. Cephalosporins are a newer class of antibiotics used in treating infections in different parts of the body.

Shares of Orchid Chemicals & Pharmaceuticals were trading 0.10% lower at Rs248.30 on BSE in post-noon trade today.


Slowdown in approval of new projects in Mumbai intensifies drop in registration of property sales in June

Nomura report says slowdown could lead developers to cut prices in the coming festive season, but this will be easier on new launches rather than existing projects

There has been a sharp 30% drop in registrations of property sales in Mumbai in June 2011 year-on-year, which confirms the worsening slowdown in the realty sector in the country's commercial capital.

According to an industry note by Nomura Financial Advisory and Securities, while high prices continue to deter new purchasers, it now seems that approvals for new projects are also slipping, resulting in a lower number of registrations.

Overall, in the first half of the year (January to June 2011), property registrations were down 20% year-on-year, in Mumbai, Nomura stated in the note published last week. A total 684 property purchase agreements were registered in the six-month period.

Prices in Mumbai city are up 15-20% on an average since January 2010-June 2010. Taking this into account, for a developer the total value of projects registered in Mumbai during January 2011-June 2011 is down only 4-8%, assuming that the product mix has remained the same.

Nomura points out that the slowdown in sales may have intensified further due to higher interest rates, which could pressure developers to bring down prices. Overall, even though the fall in registration volumes may not signal a very worrying situation for developers in the Mumbai property, the demand slowdown may have intensified further in the interim, pressurising developers to cut prices when the festive season starts in October 2011. For this to happen though, the authorities will have to release approvals for new projects, so that supply increases. For a developer, too, it is easier to price a new launch lower than it is to cut prices on an existing project.

Also, there is no need to be worried by a price correction in the Mumbai property market as it could generate a positive sentiment amongst buyers, even in the face of high mortgage rates. It is expected that volumes will move up once a price correction of 15% sets in.



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