Anand Jain eyes $500 mn more for realty fund

Anand Jain, a close associate of Reliance Industries chairman Mukesh Ambani, is raising an additional $500 million for his real estate fund.

When launched earlier this year, the Urban Infrastructure Opportunity Fund had raised around Rs 2,200 crore (around $500 million) and if the additional raising goes through, the fund will be nudging the $1 billion mark.

Sources close to the development indicate that this second round is a distinct possibility, while Jain himself was not available for comment.

The fund will look at investing in the retail explosion in the country given the enormous investment potential that SEZs represent.

A major focus of this fund will be to invest in Reliance Retail's expansion across the country, besides looking at its SEZ plans as well.

"A majority of this fund will be funnelled into Reliance's plans while Jain will also be looking at other properties as well," sources indicate.

Jain joins a list of global behemoths looking at investing substantially in the Indian real estate market.

Jain's $1 billion fund follows Tishman Speyer Properties, which has formed a joint venture with ICICI Ventures, and plans to invest around $1 billion in the market.

These list of investments are eyeing the around 600 new shopping centres that will be set up in the country by 2010.

"India's growing middle class will drive up nominal retail sales by 10 per cent per annum until 2010.

"At the same time, organised and traditional unorganised retail is becoming more important. At present organised retail accounts for a mere 3 per cent of the total, by 2010 this share will already have reached 10 per cent," notes a research report from Deutsche Bank.

According to industry information, the majority of this investment is likely to channelled into Reliance Retail's expansion in south, especially in Hyderabad, Chennai and Bangalore.

"Besides retail operations, there is also a possibility that Reliance will invest in a township in one of these cities," an industry source noted.