Unitech's AMC arm targets $4 bn funds

Unitech Realty Investors, a Chandra family-held investment management company, promoters of Unitech, is targeting funds worth $4 billion under management in the next five years.

This will be achieved by setting up at least one domestic fund every year, launching international funds and also by introducing funds in which only non-resident Indians could invest.

According to sources, the asset management company (AMC) is in the process of setting up an international $500 million private equity fund.

It is, simultaneously, planning its fourth domestic fund of Rs 300-400 crore. After these two funds, a NRI fund of $150-200 million will be launched.

The three domestic funds totalling Rs 1,100 crore - christened CIG Realty Fund I, II and III - have already been utilised for the purchase 425 acres in Gurgaon, Chennai, Kolkata, Hyderabad and Kochi.

The land was purchased through 20 separate deals, with the average transaction size being Rs 55 crore.

So far, the funds have purchased land contiguous to Unitech's retail, commercial and residential projects.

"Unlike other funds that have to spend so much time on scouting opportunities, deal sourcing is the least of my worries. We have the advantage of investing along with Unitech. To put this in perspective, our first domestic fund was launched last October and have fully deployed funds since then," said a company executive.

Unitech is the country's second largest realty firm by market capitalisation. It has land reserves in excess of 11,000 acres.

The cities identified as investment opportunities for the fourth domestic fund include Vizag (where Unitech recently purchased 1,750 acres for Rs 3,328 crore), Lucknow, Mumbai and Siliguri.

While all the funds so far have been investing in land adjacent to Unitech's projects, a deal with a local developer is likely to be closed in 2008. Sources said sector-specific funds for hotels and infrastructure could also be launched in the future.

Interestingly, two-thirds of the funds raised for CIG II and III have been from high net individuals that have each invested around Rs 1 crore. The life of the funds has been determined at seven years, and does not include any reinvestment policies.

"Unitech recently sold properties worth Rs 50-60 crore to NRIs in London, Hong Kong, New York, Dubai and Singapore from just one road show," said the source.