Even as fund raising in India seems to be tough, real estate sector in the country is witnessing the launch of many private equity (PE) funds. The new entrant into the PE space is Sanjay Dutt, chief executive officer (business), Jones Lang LaSalle (JLL), a global property consultant firm.
According to sources in the know, Dutt, former joint managing director at Cushman & Wakefield, is joining hands with Nipun Sahni, former head of global commercia, real estate, India, at Bank of India Merril Lynch, to launch the fund.
The fund size is in range of Rs 300-400 crore. Dutt, who was at Cushman & Wakefield during 2011-08, had a three-and-half-year stint at JLL.
When contacted, Dutt declined to comment. Anuj Puri, chairman and country head, India, at JLL, confirmed the development. "Yes, Sanjay has put in his papers. He wants to become an entrepreneur himself. We wish him the best,” Puri said. Nipun Sahni could not be contacted.
Recently, Naresh Naik, managing director, Morgan Stanley Real Estate Investing (MSREI), had resigned to set up his own fund. Early this year, senior executives of South Asian Real Estate Group or SARE Group, an investment and development company, resigned to launch a $50-million real estate fund.
However, according to experts, fund raising in real estate would be tough for the first-time funds. "Domestic market is opened up and can be a source for new funds, while international investors are yet to be convinced on Indian realty’s growth potential," a PE executive said.
Also, the new guidelines for alternative investment funds, brought by market regulator Securities and Exchange Board of India (Sebi) is also expected to hit fund raising in real estate space.
The new regulation has fixed the minimum investment size per individual to Rs 1 crore. At present, individual investors, who invest around Rs 5-50 lakh, play crucial role in domestic real estate funds. Also, Sebi has fixed the number of investors per fund at 1,000.
For the past couple of years, leading real estate-focused private equity firms are on a fund raising mode. These being Shapoorji Pallonji Real Estate Fund ($500 million), ASK Real Estate Special Opportunities Fund ($220 mn), Kotak India Realty Fund IV ($130 mn), JM Financial Real Estate Income Fund ($110 mn) and Milestone Domestic Scheme III ($109 mn). Others include ICICI Venture, which is raising a Rs 1,000-crore India Advantage Fund Real Estate Series 2 and Indiareit Fund Advisors, part of the Ajay Piramal Group.