Ansals Ready with Rs 200 Crore for BuyOuts

In Feburary-2007, we had predicted a shakeout in the real estate sector. Just a while ago, India's Second Largest properties Developer, Ansal Properties and Infrastructures [APIL] has announced that it is sitting with Rs 200 crore cash to BUY-OUT weaker players who are about to default.

Mr. Anil Kumar, CEO of APIL said,

The market is slowing down and funds from banks are not easily available.Some of them would like to exit. The acquisitions are likely to be in the same places where the company operates: Rajasthan, Punjab, Uttar Pradesh and National Capital Region. The company might also consider other financial arrangements with distressed companies. Ansals, for example, could build a project on a company’s land, and then return a portion of it to the company.

Sujit Jain, a real estate analyst at PINC Research in Mumbai, said

Many smaller companies paid high prices in land auctions and were unable to make projects viable. Now it makes sense for large developers to sweep in and acquire the distressed companies’ land banks. Instead of going out and buying plots at high prices, why not go and buy companies who have already built up land banks. These people (promoters of smaller firms) will look to liquidate and take out as much money as possible.

Big Bull, Rakesh Jhunjunwala laughed off when Niranjan Hiranandani said that Real Estate was an attractive investment option. Rakesh pointed out how he bought his Nariman Point office from a distressed seller at Rs 10,000 / SFT the latter having bought at Rs 14,000 / SFT during the boom, a decade ago.