India may attract private equity worth $75 million to $80 million in 2016

The retail sector in India is expected to attract private equity (PE) worth $75 million to $80 million in 2016 against $39 million last year, a new report by property consultancy JLL India has said. The foreign direct investment (FDI) inflow into retail trading has increased between October 2014 and September 2015 to $70.75 million, the property consultant said in its latest report on Thursday. “Economic stability, liberalisation of the FDI policy and improvement in consumer sentiment is expected to help global brands witness a conducive environment for investment in the Indian retail and retail real estate sectors,” JLL said in the report. Foreign brands such as Carl’s Jr, H&M, Aeropostale, Gap, Wendy’s, Barcelos and Jamie’s Italian entered India in 2015. JLL said the PE investments were largely confined to a few retail players in India. In 2015, PE investment into retail properties was $39 million, and in 2016, it is expected to be in the range of $75-80 million. In 2016, PE may also go into select mall investments, especially in under-represented markets or for buyout of mature assets, the report said. Going forward, in response to changing consumer, brands and retailers’ preferences, evolution of retail real estate is bound to become faster in the days ahead, which will lead to the emergence of stronger retail real estate players, who may manage to get PE investment in the coming years. In order to stay afloat, retailers will have to redo their real estate strategy and adopt a flexible approach customised to different micro-markets, says JLL. Investment by both home-grown and international brands is likely to strengthen in tier-II and tier-III markets as they expand beyond tier-I cities. Investment by large players will also be seen in 2016. In 2015, single-brand retail saw relaxation in sourcing norms, which is expected to rack up FDI inflows in the times to come, views JLL. Moreover, in the Budget 2016-17, 100% overseas capital was allowed in processed food retailing through the Foreign Investment Promotion Board (FIPB) route.

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