Apollo makes $1 billion bet on Indian property with lending plan

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Apollo Global Management Inc. plans to lend approximately $1 billion to Indian developers this year, counting on a resurgence in the residential real estate market as the pandemic subsides. According to Nipun Sahni, a partner at Apollo, the private equity company financed $750 million to Indian developers last year, with two-thirds of that amount going to residential projects.

Home builders will receive roughly 70% of this year’s loans, while commercial developers will receive the remainder. “Market volumes have returned to pre-Covid levels, and in some markets, they are even greater than in 2019.” “In an interview, Sahni stated. “It is rapidly consolidating, with the number of unsold properties in India at a 10-year low, indicating that prices may rise.””

Low lending rates and developer discounts drove demand as India’s home industry recovered from the depths of the coronavirus pandemic. According to a Crisil Ratings Ltd. research released on May 10, low inventory levels will likely maintain the residential property market boom, with prices rising as much as 10% across the country’s top six cities. Because of the growing number of initial public offerings and the overall expansion of the technology industry, the country’s office property market is benefiting from more hiring in startups, according to Sahni.

According to its website, Apollo oversees $513 billion in assets internationally, having opened its Mumbai office in 2008. In 2017, the company began lending to Indian property developers. A year later, shadow banks like IL&FS Investment Managers Ltd. and Dewan Housing Finance Corp. went bankrupt, causing a slew of credit market disruptions. Apollo stepped in and stepped up its loans. The firm took off when funding demand increased during the pandemic, according to Sahni.

He said the private equity firm wants to employ two more bankers this year to supplement its 12-person real estate team in India. The partner stated, “We have the appetite to continue investing and capitalise on the upheaval in the Indian financial markets.” According to him, Apollo‘s typical loan size will be between $40 million and $60 million.

The conflict in Ukraine and supply chain concerns could have an impact on India’s real estate sector. The Reserve Bank of India startled investors with an interest rate hike earlier this month, draining liquidity from the banking sector, with Reserve Bank of India Governor Shaktikanta Das blaming ongoing inflation pressures. According to Sahni, rising commodity prices, especially those used in construction, would undoubtedly drive up real estate prices in India, as will pent-up demand for dwellings.

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