Raising real estate funds from investors in the domestic market was becoming competitive, said a senior executive of ICICI Venture, one of the largest venture capital funds in the country.
Both fund managers and property developers are planning to raise as much as Rs 7,500 crore from local investors in the backdrop of subdued demand for realty investments in international markets.
ICICI Venture is planning to raise a Rs 1,000-crore domestic property fund in the next couple of weeks.
“There is competition. Investors have to make a decision about whom to back,’’ said Sanjeev Dasgupta, president of real estate at ICICI Venture, which manages $550 million of realty investments.
Besides ICICI Venture, Ajay Piramal Group-promoted Fund Advisors, Aditya Birla Group and developers such as Unitech, Ackruti City, Shapoorji Pallonji are planning to raise property funds.
“In a lot of these kind of funds, investors have to look out for conflict of interest whether those who have launched funds invest in their own projects or other developers’ projects,’’ he said.
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ICICI Venture had plans to launch an offshore fund of $1-1.5 billion, but could not go ahead due to the slowdown in the realty sector. Also, its key employees, including Managing Director Renuka Ramanathan, quit last April.
To play safe with its investments, ICICI Venture has decided to scale down the ticket size of investments from the domestic fund to Rs 50-100 crore from Rs 300-400 crore earlier and reduced the life of funds from seven-eight years to five years.
“We want to invest in smaller projects, as exits there can be faster,” said Dasgupta. The firm was also looking at exiting from its investments in the next 24-36 months, he said. “We seem to have quite a bit of time to go. IPO situation looks temporary. I believe the European crisis will help increase allocation to emerging markets such as India,’’ he said.
ICICI Venture has investments in property developers such as EWDPL and Kolte Patil Developers.