ICICI to raise $3 bn for PE, property funds

ICICI Venture Fund Management will tap investors for a $1.5 billion private equity fund starting next week, and may raise an equal amount for a real estate fund, Chief Executive Officer Renuka Ramnath said in an interview in Mumbai. The division currently manages about $2.5 billion in assets.

ICICI joins Blackstone Group LP and local rivals, including Kotak Mahindra Bank, in seeking investment opportunities in India, where private equity funds invested seven times as much as in China in the first quarter. India's economy has grown an average 8.7 per cent annually since 2003.

"India's attraction continues to be growth," said Ramnath, 47. "We want to focus on opportunities in the knowledge sector and domestic consumption-led areas of retail, services, education in the private equity fund."

Private equity funds invested $4 billion in Indian companies through the quarter ended March, 67 per cent more than a year earlier, New Delhi-based advisory firm IndusView Advisors said last month. That compared with the 76 per cent drop to $570 million for China, the firm said.

Morgan Stanley, the second-biggest US securities firm, last month said it planned to start operating a private equity unit in India this month. Kotak Mahindra, the former partner of Goldman Sachs Group Inc in India, plans to raise about $1.2 billion for two funds.

The record economic growth and a shortage of homes that led to a four-year rally in property prices helped attract Warburg Pincus LLC and Blackstone, which have bought stakes in domestic real-estate developers in recent months. The world's second-most populous nation will face a deficit of 26.5 million houses by 2012, the government estimates.

Deutsche Bank's RREEF Unit, the world's largest alternative investment manager, plans to invest more than $1 billion over three years in India's real estate and infrastructure assets, Kurt Roeloffs, the division's regional chief executive officer, said last month.

ICICI's proposed $1.1 billion real estate fund, which may be expanded to $1.5 billion, will invest in residential and commercial projects in a dozen cities, including the capital, New Delhi, and the commercial hub of Mumbai, Ramnath said. Most of the funds will be raised from investors in the US, Europe, Japan, Canada and the Middle East, she said.

ICICI Bank sold $5 billion of shares and borrowed about $10 billion in 2007 to bolster its capital and make more loans.