Piramal's Indiareit to raise Rs 200 crore for rupee fund

Plans to launch $300 mn offshore fund next month

Indiareit Fund Advisors, the private equity arm of Ajay Piramal’s Piramal Enterprises, is looking to raise around Rs 200 crore in the next two-three months as part of fifth domestic real estate fund.

The domestic fund has a total corpus of Rs 750 crore with a green shoe option of Rs 250 crore.

Indiareit has already raised Rs 50 crore for this fund last year and looks to raise the entire amount by March next year, said Khushru Jijina, mananging director, Indiareit.

Jijina said the firm is also looking to launch $300 million (around Rs 1,620 crore) offshore fund next month from investors from Europe, Asia and Australia. Indiareit last raised an offshore fund in 2006.

In doing so, Indiareit joins fund managers such as HDFC, ASK Group, Kotak who are in the market to raise new offshore funds.

However Indiareit, which manages assets worth Rs 4,220 crore, has scaled down the fund corpus of the offshore fund from $500 million earlier to $300 million.

“We think $300 million is better in the current market conditions,” Jijina said.

Consultants say raising domestic money would be easier than raising offshore fund for Indiareit.

“Domestically, they are well known name, delivered good returns and their distribution is very good. But raising an international fund for Indian properties is challenging for all fund managers  including indiareit,” said Ambar Maheshwari, managing director, corporate finance at Jones Lang LaSalle.

Indiareit today said that it has made two investments worth Rs 200 crore in realty projects in Mumbai and Pune. First was Rs 100 crore investment in redevelopment project of Omkar Realtors in Bhoiwada in Central Mumbai from its Rs 400 crore Mumbai Redevelopment Fund. Second one pertains to investment in projects of Marvel Group of Pune.

"In both these transactions, we have protected risks and have adequate cover. We are lookng returns of upwards 20%", said Jijina said.

Jijina said Indiareit will launch another fund aimed at investing in redevelopment projects in Mumbai in April next year, after exhausting the current fund.

“We will keep it around Rs 400 crore to Rs 500 crore so that we can invest between Rs 80 crore to Rs 100 crore and launch the next fund,” he said.

JLL Maheshwari said the redevelopment fund was a good move considered that redevelopment projects are big business is a big business in large cities and a lucrative one.