Return to search

Indiareit Fund Advisors Plans $500M Fund

Indian real estate fund Indiareit Fund Advisors is planning to raise a $500 million offshore fund to invest in Indian development products, Reuters wrote Friday. Indiareit Fund Advisors is a unit of drugmaker Piramal Healthcare.

(Reuters) – Indian real estate fund Indiareit Fund Advisors, a unit of drugmaker Piramal Healthcare , is planning to raise $500 million via an offshore fund to invest in Indian development projects, the company’s top executive said on Friday.

The fund, to be launched after June, will look at raising money from investors in America, Europe and Asia who are showing renewed interest to invest in India, managing director and chief executive officer Ramesh Jogani said in an interview.

“Investors are better educated about investing in India after their first round of learning and developers have matured and are more investor-friendly, so there is minimum mismatch in investment expectations,” said Jogani.

The fund is being raised at a time when India’s debt-laden developers are facing limited funding options as banks are cautious about lending to the sector and international private equity players are looking to exit investments.

International private equity firms, which have invested $13 billion in the Indian real estate sector since 2005, are expected to exit up to $5 billion worth of investments over the next couple of years, according to international property consultancy Jones Lang LaSalle.

“The West is still grappling with their own issues and seeing the Indian stock markets bump up again, foreign investors are looking keenly at India,” said Jogani, adding that while there is liquidity, investors have also become a lot more selective in their investment.

He said the offshore development fund will only invest as an equity partner and will focus on projects in Mumbai, Delhi, Pune, Chennai and the National Capital Region, which includes Gurgaon.

Indiareit has three domestic funds worth 19.5 billion rupees ($396.38 million) and an offshore fund worth $200 million.

The company is also raising two other funds – a $125 million rental yield fund which will invest in income-producing properties like offices across India, and a five billion rupees slum redevelopment fund which will invest mainly in Mumbai projects.

” We have started the slum redevelopment trend and hope others catch up. There are also more investors putting money into income-producing assets,” Jogani said, adding that the company will launch the slum redevelopment fund in the first week of March.

Last month, another India-focused fund Red Fort Capital said it raised $500 million to invest in Indian property sector. .

A bunch of domestic funds including HDFC, ICICI Ventures, the private equity arm of no. 2 Indian lender ICICI Bank and Kotak Realty Fund, the property fund of Kotak Mahindra Bank are on the road to raise funds to invest in the Indian property sector, though investors to these funds are cautious on India.

The investors in private equity funds or limited partners continue to favour Asia as a destination, but the percentage seeing India “as an attractive region in which to invest” has fallen by 23 percentage points from December 2010, from 35 percent to 12 percent, according to London-based research firm, Preqin.

($1 = 49.1950 Indian rupees) (By Aditi Shah and Indulal PM; Editing by Subhadip Sircar)