INDIA BUSINESS WORLD - JULY 2006
THE MONTH THAT WAS...

MORGAN STANLEY BUYS INTO DELHI REALTY FIRM FOR $65 M

MORGAN Stanley Real Estate has picked up a stake in Delhi-based developer Alpha G Corp Development for Rs 300 crore or around $65 million. Although exact equity stake could not be known, it is expected to be in the region of 15-20 %. This will be the second major investment by Morgan Stanley in India in the real estate space over the last four months when it picked up equity in Bangalore-based Mantri Developers for a similar amount.

Backed by industrialist Ghanshyam Sheth, along with the Mulji and Choudhurie families, Alpha was founded in 2003 by a group of real estate professionals, lead by RS Sodhi and SK Sayal. Alpha's core management team was earlier part of Gesco Corporation — the de-merged real estate business of Great Eastern Shipping — and subsequently Mahindra Gesco.

The company works on a revenue-based development management fee model while offering property development and management services. It is currently executing projects relating to townships, retail malls, office and residential developments across cities in northern and western India , including Gurgaon, Amritsar , Jaipur, and Ahmedabad, among others.

With this equity infusion, Alpha would take up development of large-scale township and large-format retail projects backed by foreign direct investment, SK Sayal, CEO, Alpha, told ET. Morgan Stanley would get a representation on the board of the company. Globally, Morgan Stanley manages approximately $51 billion in real estate assets on behalf of its clients. Since 1991, Morgan Stanley has acquired $87.7 billion of real estate assets worldwide. Over the last one year several international real estate funds have picked up equity positions in property projects in India while some have taken stake in development companies. According to a Merrill Lynch forecast, the Indian realty sector is likely to grow from $12 billion in 2005 to $90 billion by 2015. Currently, around $5 billion of private equity funds are said to be chasing Indian realty projects, as per industry sestimates.