Almost a year after launching its Rs 1,000-crore domestic fund, ICICI Venture, one of the largest private equity firms in the country, raised Rs 200 crore last week, according to sources privy to the development.
This is the first closure for the fund had an initial corpus of Rs 500 crore and an option to raise an additional Rs 500 crore. The fund house, which has $2-billion under its management, is also raising more funds, though this would finally depend on how much money it would garner, said a person involved in the fund raising. "The markets were bad all along, otherwise we would have done it earlier," he said.
A company executive insisted the company had around Rs 600 crore of capital from the new fund to invest in projects. The fund would invest in mid-market residential projects with an investment period of two to three years.
“Earlier, we had invested in retail, office properties, special economic zones and residential properties. The fund is focusing on residential projects,” he said. ICICI Venture has $550 million under management in domestic and offshore real estate funds.
Consultants and fund managers say most fund managers are finding it difficult to raise funds, owing to the challenging environment, the slowing economic growth, volatility in stock markets and the uncertainty in euro zone. "In this environment, raising money for real estate is a huge challenge. Only with the right team and the right track record can fund managers raise money," said Ambar Maheshwari, managing director (corporate finance), Jones Lang LaSalle, a property advisory.
Sunil Rohokale, executive director, ASK Investment Holdings, said the track record of fund managers was playing a key role in fund raising. ASK which has launched a Rs 1,000-crore fund, has carried out its first closure at Rs 520 crore in June, and looking to raise the rest by early next year. “There is de-growth in the residential market, compared to previous month or year. But this does not mean people have stopped buying properties. At the right price, uptake is still there,” Rohokale said.
A number of fund managers like Indiareit, Kotak and Red Fort are in the market, seeking to raise realty funds of around $1 billion.
"If any fund manager has raised funds during 2005-06, but could not show the performance and exits to investors, it is finding it difficult to raise new funds," said a senior executive of a Mumbai-based fund manager.