Indiareit Fund Advisors Pvt Ltd, a real estate fund manager promoted by $1.8 billion Piramal Enterprises, said it will raise an offshore fund worth $300 million. The fund will be used to finance real estate projects in India in the next four years.
Talking to FE, Ramesh T Jogani, managing director and chief executive officer of Indiareit, said that the firm has already announced the closure of $150 million out of the proposed $300 million fund in October 2008. The remaining $150 million will be raised in the next one year from across the globe, Jogani said, adding that a major portion of it will flow from the Middle East.
The $300 million corpus will be the fourth real estate and second offshore fund raised by Indiareit. It will be invested with 6-7 real estate developers to promote 15 projects covering around 50 million sq ft, Jogani said. He said the company is bullish on the Indian real estate market in the longer term.
He also noted that Indiareit is raising funds alternatively, through domestic and offshore routes. After the closure of the current $300 million offshore fund, the next real estate fund will be a domestic one.
“But, we have not yet decided on the timeframe it,” he informed.
Indiareit’s first domestic float, raised in 2006, was worth Rs 430 crore, and had a ticket size of Rs 1 crore. It was followed another domestic float worth Rs 550 crore in 2007. The company also raised $200 million in 2006 through its first offshore fund scheme. 3i, one of the world’s largest private equity and venture capital firms, was a cornerstone investor in this fund.
Of the total Rs 1,850 crore raised through the three schemes–two domestic and one offshore– so far, Indiareit has invested around Rs 1,450 crore in seven real estate firms across the country, to develop properties measuring around 40 million sq ft. Some real estate firms that have absorbed funds from Indiareit include Mumbai-based real estate majors Neptune Developers and Aristo Developers, Pune-based Paranjpe and Bangalore-based Skyline Group.
In fact, Indiareit partnered with Paranjape Schemes (Construction) Ltd to develop one of the largest integrated development projects in Pune. Spread across 138 acres at Hinjewadi, the project will entail development of IT/ITES SEZ, residential apartments and villas, a retail mall and star hotel. The project, in which Indiareit is committed to invest Rs 250 crore, entails more than 9-million sq ft of development. The firm’s partnership with Skyline was to jointly develop 16 residential projects in Bangalore and one project in Mysore.
Indiareit’s bullish approach comes at a time when the real estate industry in the country is facing a slowdown. According to industry experts, real estate firms with strong balance sheets will continue construction activities, taking advantage of declining input costs.