MUMBAI: ICICI Prudential Asset Management Company has raised over Rs 600 crore through its real estate fund, according to two sources familiar with the development.
ICICI Prudential Alternative Investment Fund 1 has a base target of Rs 750 crore and a green shoe option that takes its total size to around Rs 1,300 crore.
This is ICICI Prudential's third such fund that will largely invest in residential projects in the top seven property markets of the country, including Mumbai, the National Capital Region and Bengaluru.
The company aims to conclude the fund raising by Marchend. ICICI Prudential will be investing in projects of leading developers through structured debt with a target of 21-23% annual returns over an investment horizon of 4-5 years. The fund has already identified two projects in Mumbai and is negotiating with developers to invest in these.
"Besides, the fund has already invested Rs 40 crore in a transaction for an under-construction residential project in eastern Pune," one of the sources quoted above said. "The fund is also looking to deploy money from this fund to acquire apartments though bulk deals with discount."
In response to an email query, an ICICI Prudential spokesman said: "We are not in a position to comment on this matter since we are in the process of fund raising".
Last year, ICICI Prudential raised Rs 1,000 crore from the domestic market for investing in real estate projects. The fund has already deployed over 90% of that round through 11 investment deals.
Experts say domestic and overseas investors are showing an increased appetite for real estate funds as the outlook for the Indian property market has improved with the formation of a stable government at the Centre.
"The real estate sector had been witnessing weak sales for some time. But the new government's efforts on the policy front and hopes of rate cuts next year are pushing expectations of better housing demand. Investors are also gearing up for this and the appetite for real estate funds is getting better," said Chintan Patel, partner, transactions & restructuring, real estate & hospitality, at KPMG India.
The positive sentiment can be measured by the fact that global real estate funds focused on India are seeking to raise $6 billion in new capital, on top of $1.6 billion raised in the first seven months of 2014.
Most of this new capital being raised is aimed at investments in residential projects.
ICICI Prudential is also in talks to exit four of its investments made through the first fund, which mopped up Rs 780 crore in 2007. ICICI Prudential Real Estate Investments advices and manages assets worth around Rs 3,000 crore.