Piramal plans JV with global funds

Piramal Fund Management, the Piramal Enterprises' arm which is into real estate, is in talks with sovereign funds and global pension funds for a 50:50 joint venture (JV) for providing equity capital to developers.

Piramal already has a $500-million JV with Canada Pension Plan Investment Board (CPPIB), for debt lending to housing projects in major cities.

Last year, Piramal Enterprises announced a partnership with Dutch pension fund manager APG Asset Management, where each would invest $1 billion in Indian infrastructure projects over three years.

"We are seeing a big demand for pure equity and preferred equity. We have already started giving this combination to developers. To scale it up, we will tie up with a sovereign fund or a pension fund," said Khushru Jijina, managing director at Piramal Fund Management.

The trend of JVs between Indian developers, fund managers and global funds has caught up. CPPIB also tied up with Shapoorji Pallonji to invest in office projects.

Peninsula Land, part of the Ashok Piramal Group, and Canada-based Brookfield Asset Management have announced a 50:50 JV to launch a domestic real estate fund. To facilitate the new JV plan, Piramal has deferred raising of new third-party funds in the segment. It had planned a new domestic real estate fund in the housing segment with a corpus of Rs 700 crore, to invest in both redevelopment projects and land acquisition by developers.

Beside a new $300-million offshore fund, the fund manager is not proceeding for now with a $150-mn offshore fund it had launched last year. After the initial close of $50 mn last year, Piramal was looking to raise another $50 mn by June this year for this fund.

Jijina said the company would use the $50 mn already raised and not go ahead with additional raising.

"If we do a partnership with global funds, we will not raise new funds. There will be a conflict of interest. Right now, our priority is partnership," he said. However, a managing director of a Mumbai-based fund management company felt it was better to go for fund structures than a JV.

"In a JV, you have to depend on a partner to get approval for each of the investments but in blind pool funds, we can choose our own investments," the MD said.

Jijina, however, felt it was good to have a long-term partnership with marquee global funds which bring global expertise, best practices and so on.

"We are not dependent on a partner's money. We will showcase deals to them. If they do not like it, we will go ahead with the deal anyway," he said.
A NEW BEGINNING

• Piramal has a $500 -million joint venture with Canada Pension Plan Investment Board to lend debt to residential projects in India
• Last year, it announced a partnership with Dutch pension fund manager APG Asset Management to invest $1 billion in infrastructure projects in India
• Pirmal plans to launch a new residential real estate fund with a corpus of Rs 700 crore to invest in redevelopment projects and land acquisitions
• Khushru Jijina, managing director at Pirmal Fund Management, said it is good to have a long term partnership with marquee global funds who bring global expertise