The real estate fund of ICICI Venture, India?s second-largest private equity fund by assets managed, has made two investments in New Delhi and in Mumbai, its first from the second fund named ICICI Venture Real Estate Series II fund.

ICICI Venture has invested R30 crore in New Delhi-based Advance India Projects? special purpose vehicle (SPV), Haamid Real Estate and R50 crore in a Prabhadevi (Mumbai) property of Jagdish Ahuja-promoted Shri Ahuja Properties of Ahuja Constructions via the optionally convertible debentures (OCDs) route.

Advance India Projects is planning a group housing project in Gurgaon on an 8.4 acre land parcel. The total project size is R136 crore. The fund has targeted an internal rate of return or IRR of 22%.

The Prabhadevi property, on the other hand, is being constructed on 3.25 acres of land under the Slum Rehabilitation Authority or SRA and is currently 60% constructed. It will have a total saleable area 0.45 million sq ft with a total of 78 units. An email sent to Vishakha Mulye, CEO and managing director at ICICI Venture, did not elicit any response.

The ICICI Venture Real Estate Series II fund has a corpus of nearly R300 crore. The fund has a shorter tenure of 3-4 years and is mandated to invest in residential projects in tier 1 cities. ICICI Venture manages a $550 million dedicated India Advantage Fund Real Estate Series 1. This fund is fully committed across 13 investments including Lodha Elevation Buildcon, Jubilee Hills Landmark Projects and Entertainment World Developers, among others.

Experts believe that the debenture route is not the best way of investments in the currently heavily debt ridden real estate sector. ?There are many HNIs and institutions being attracted towards the debenture route of investment but it should ideally be the last route because of the high risk involved,? said Om Ahuja, CEO (residential services) at Jones Lang LaSalle India. ?It is happening at a massive scale but is a kind of herd mentality.?

The Mumbai residential property market has fetched 8-9% growth on capital value over a year, whereas Gurgaon and New Delhi offered 12% and 7-10%, respectively.