Godrej Fund in talks with global investors to raise new corpus of $500 mn

Godrej Fund Management (GFM) the private equity arm of Godrej group, is in talks with global investors to raise a PE fund to invest in office properties, said a senior executive in the firm. The fund size would be around $500 million (Rs 3650 crore).

“We are going to have a second fund and we are in talks with global bluechip investors for the same,” said Karan Bolaria, managing director, Godrej Fund Management.

The fund would invest $50 million to $150 million each and focus on Mumbai, National Capital Region, Pune, and Bangalore markets, he said.

Dutch Pension Fund APG and Allianz Real Estate have invested in previous funds of GFM. However, Bolaria did not disclose whether APG and Allianz would participate in its new fund.

He said the fund manager has invested full corpus of its $450 million Build to Core Fund and Godrej Office Fund of $ 150 million. He said GFM is bullish on the demand for Grade A office spaces (which are centrally air-conditioned and well-maintained offices).

“There is a shortage of Grade A office properties. There are a lot of sectors such as information technology (IT) which need physical offices which is a favourable trend for our platform,” he said.

Bolaria said GFM is actively looking to buy land in Mumbai, NCR, Pune, and Bangalore and in talks with many landowners to buy land parcels.

“Land valuations have come down by 10-20 per cent. It is a good time to buy land because of slide in valuations and demand for grade A office properties,” he said.

He said GFM would look at floating a real estate investment trust or REIT once it reaches a certain scale. The fund manager is also looking to invest in data centers, he said.

GFM has around 4 million square feet of office properties under development. Of that, about 1 million square feet is going to become operational by December this year. The remaining 3 million square feet will become operational in the next 24-36 months, Bolaria said.

Many other property developers such as Oberoi Realty, Tata Realty are looking to expand their office portfolio. For instance, Oberoi Realty is looking to expand into cities such as Bengaluru and NCR and develop office properties there.