HDFC Property Fund to raise $500-million offshore fund

Having raised a $250-million (Rs 1,500 crore) offshore fund in July this year, real estate fund manager HDFC Property Fund is now gearing up to launch a $500-million (Rs 3,000 crore) offshore real estate fund, according to an executive in the know of the development.

The fund will hit the markets by the middle of next year and invest in residential projects like the last fund, the executive said, adding, "They (HDFC Property Fund) will continue doing structured debt deals from the new fund."

Although the fund manager took one-and-a-half-years to raise the last fund owing to tough market conditions, this time around, it is confident of raising funds in a shorter time frame, the executive said. HDFC Property Fund management could not be reached for comments.

HDFC Property Fund has already committed Rs 1,100 crore from the last fund, the executive added. The commitment includes a Rs 180-crore transaction with Paranjape Group in Pune, a Rs 200-crore deal with the Mahagun Group in Delhi, Rs 130 crore with True Value Homes in Chennai, and a Rs 175-crore transaction with Bangalore-based Embassy Group, among others.

HDFC has also raised $200 million from the likes of the Government of Singapore Investment Corporation, Temasek Holdings and Oman's State General Reserve Fund.

The company has real estate assets of $1 billion under management. Although HDFC had initially planned to raise a corpus of $500 million for its last fund, it could raise only $250 million because of tough market conditions. Before that, it had raised $800 million from offshore markets in 2007.

After a lull, some Indian fund managers have raised offshore funds this year.

Recently, Ajay Piramal group's Piramal Fund Management raised $50 million (Rs 300 crore) for its $150-million (Rs 900 crore) offshore real estate fund - Indiareit Offshore Fund-3. This is the first time the group has raised funds from institutional investors abroad.

"Global sentiments for Indian real estate investments are improving thanks to the initiatives of the new government," said Khushru Jijina, managing director, Piramal Fund Management.

Mumbai-based ASK Group has also a $200-million offshore fund, for which it has already raised $50 million and is in the process of raising the remaining.