HDFC AMC to launch realty fund soon

Sources say around corpus to be around Rs 1,500 crore

HDFC Asset Management (AMC), backed by HDFC and Standard Life Investments, is looking at launching a real estate fund early next year.

Though sources put the fund size at around Rs 1,500 crore, HDFC AMC managing director Milind Barve said the company has not yet decided on the total corpus to be raised.

“We are already exiting our investments with good returns. We believe the performance of the previous fund to be strong. Now we are well positioned to launch a new fund,” Barve said.

HDFC AMC had last raised Rs 3,500 crore real estate fund and already exiting its investments from that fund.

Barve said the AMC will launch a smaller sized fund without specifying reasons for the same, though the industry sources say that most of fund managers are likely to go for smaller sized funds due to falling appetite from investors for real estate investors.

Though the AMC had raised funds through portfolio management services (PMS), this time around the AMC is raising funds under the new alternative investment fund guidelines of Sebi.

“We have applied with the Sebi under new guidelines and awaiting the approval,” said Barve.

According to an executive with a fund management company, HDFC has applied for approvals under Category II which means the funds are not meant for investments in infrastructure, social sectors and hedge funds. “They have specifically applied for real estate,” the executive said.  The fund manager can invest in debt and equity instruments under category II funds.

According to sources, Reliance Asset Management and Motilal Oswal Financial Services have also applied for Category II funds from Sebi.

“There is no channel available to raise funds now. All fund managers have to go under alternative investment guidelines (AIF) guidelines of Sebi. You cannot do PMS or VCF(venture capital funds) structures anymore,” said a chief executive with a fund management company.

Recently, HDFC PMS exited the housing project of Mumbai-based Runwal Group by selling 50 per cent in the project for Rs 250 crore.