Though the scenario remains tough in the Indian private equity space, a few funds are ready to add more capital by using over-allotment options. India Infoline Venture Capital Fund, the VC arm of the country’s leading financial services provider, is adding another Rs 200 crore to its Rs 500-crore real estate fund.
India Infoline had raised Rs 500 crore under its IIFL Real Estate Fund (Domestic) Series-1 early this year. It is set to complete its fundraising by adding another Rs 200 crore by this month.
According to Balaji Raghavan, CEO, “Though the scenario is tough, investors’ trust in
India Infoline’s experience in long-term investments helped us in fundraising.”
After making its first investment here last month, the fund is signing its second deal for a project in the region around Delhi. The Rs 500-crore residential project comprises houses in a range of Rs 35-40 lakh. The realty fund will deploy Rs 75 crore in the project which is situated in 875,000 sq ft land. IIFL Real Estate Fund is shortly likely to deploy the same amount in another residential project in Bangalore.
Raghavan said they’d do seven-eight deals under the present fund and not more than 15 per cent will be put in a single project. Last month, the fund had committed Rs 80 crore in a slum redevelopment project of Sheth Creators in Mumbai’s Sion area.
According to sector estimates, the real estate sector in India is in need of almost $15 billion (Rs 84,000 crore) of private capital over the next 12 months to sustain growth momentum. PE investors see a huge opportunity in this space, as other sources such as bank loans have dried.
A PE executive said, “With silly capital from hedge funds, fixed maturity plans of mutual funds disappearing and the Reserve Bank prohibiting banks from providing land acquisition funding, developers are seeking PE funds in residential projects. In any case, PE funds also want to invest in residential projects only (apart from income producing office properties).”
Firms such as IL&FS Investment Managers, Anand Rathi-Knight Frank, JP Morgan Partners, ASK Investment Advis-ors, Azure Capital Advisors and Lavi Real Estate Advisors are in a fund-raising mode at present.