Ireo plans to raise Rs 1,000 cr domestic PE fund

Launches 23 projects across Gurgaon, Mohali, Ludhiana and Pune, including 19 mn square feet of residential area and 4 mn square feet commercial area

Ireo, one of the largest private equity funds dedicated to the Indian real estate sector, is planning to to raise its second fund with a target corpus of Rs 1,000 crore which will be raised in India. Ireo has been investing in the country since 2004 through its offshore fund and is understood to have invested close to $2 billion in developing real estate across various cities. Unlike many other real estate PE funds, Ireo, has evolved into a fully integrated real estate organisation that is both the financier and developer of its projects.

Investment bankers who are in the know about Ireo plans for its next fund said that the process to launch the fund is at an advanced stage and the road shows will be kicked off pretty soon.

A senior management spokesperson for Ireo however said that they might look at raising capital in the future provided the macroeconomic environment improves and the government is willing to relook at the Foreign Direct Investment policy and make it more fair and balanced for international investors.

"The relatively tough market conditions and the revised SEBI regulations for raising capital, indeed poses a challenge for the realty as well as other private equity funds in India. However, at the same time, there is a lot of investor appetite for pedigreed funds managed by experienced investors with a proven track record of successful capital deployment and exit generation," the spokesperson added.

Ireo over the past eight years has developed a portfolio spanning across Delhi-NCR, Punjab, Chennai, Coimbatore, Pune and Goa. It has a geographically and functionally diversified portfolio of around 4,500 acres of owned land along with a development platform, which commands a premium positioning in the market.

Till date, the group has launched 23 projects largely across Gurgaon, Mohali , Ludhiana and Pune, including 19 million square feet of residential area and 4 million square feet commercial area, besides having alliances with premium developers and operators like Ascendas, Panchshil, Grand Hyatt and Banyan Tree.

Ireo's current investor base consists of blue chips and globally renowned financial institutions. The PE is embarking on the new fund at a time when many real estate focused Private Equity funds are finding it extremely difficult to find an exit after entering into companies and assets during the 2007-2008 time-frame and they are being forced to either restructure their holdings or exit at a loss.

The Ireo spokesperson commenting on the difficult scenario in the Indian market said that with their network with developers, land-owners, intermediaries and property consultants in the market, they have access to proprietary deal flows, several of which might not be within the purview of its offshore fund's mandate or Foreign Direct Investment's regulatory framework but may be invested through domestic capital and they are hopeful that their differentiated approach will lead to value accretion opportunities in its future investments.