MUMBAI: Indiareit Fund Advisors, the real estate-focussed private equity arm of Piramal Enterprises, has cut the corpus of its $500-million (around Rs 3,090 crore) offshore fund by half, citing the overall slowdown in the sector and tough regulations as reasons.
To raise $250 m
“People are wary of the real estate environment in India and, coupled with that, are the economic conditions and tough regulations in the country,” said Khushru Jijina, Managing Director.
The firm now intends to raise $250 million from investors across Europe, West Asia and other Asian nations. It commenced road shows in October.
“We are looking at the first closure of $75 million, hopefully by the end of April,” said Jijina. The remaining, depending on the response, would be raised in multiple tranches by April 2015. The PE firm would raise small funds of $25 million each from many limited partners (partners whose liability is limited to investing in the fund), rather than going for large investors.
The funds would be deployed in the same type of (residential) assets and cities that its domestic funds invest in. Indiareit, which has a total of Rs 5,319 crore assets under management, already has three “serious” investors conducting due diligence on the offshore fund.
“There is a co-investment formula of 70:30 with the domestic fund, with a general ticket investment of Rs 150-200 crore in projects,” Jijina added.
By mid-next year, the company would start exiting the Domestic Scheme IV. The fund, which had raised Rs 888 crore in 2010, was deployed across seven transactions.
The company, which forayed into real estate development with the first set of residential projects in Bangalore, has also completed fund-raising for its ultra-luxury villa project on Sarjapur Road.
Indiareit is now gearing up to launch its second self-development project on Whitefield Road in the city, where it has already sold more than 100 apartments during the soft launch. This would be followed by Electronic City in the next four-six months, again in Bangalore.
Indiareit is also readying to move into the Chennai market, even as its investment focus would remain on Mumbai, Pune, Bangalore and the national capital region. “It could be in a year, in 18 months or two years,” Jijina said, adding real estate development is a “local game” and the company intends to build its strength across all locales.