Societe Generale arm to launch realty fund

SG Private Banking, the private banking arm of Societe Generale, will launch an India-dedicated real estate fund for its global investors, who want to benefit from the real estate growth story in India.

The fund is expected to raise a few hundred million dollars from investors across the globe and is likely to be registered in Mauritius. It will be closed at the end of this year.

"The first closing will be done towards the end of this year. The fund will be kept open for some more time, and the second closing may be done by the end of the first quarter of next year," said Balakrishnan Kunnambath, managing director, global market manager, Indian sub-continent, SG Private Banking (Asia-Pacific), in an interview.

The investment will be made through the foreign direct investment route and this fund will be managed by Societe Generale Asset Management.

The Societe Generale Group will also put in some money into the fund, which will invest in development projects in the both housing and commercial spaces in India. Development of townships is another area being looked at.

Stagnancy in returns from property assets in the Western markets and better returns from the Indian real estate sector have resulted in many international investors, including Goldman Sachs, Blackstone, Citigroup, Morgan Stanley, Walton Street Capital and the Starwood Capital Group entering the Indian real estate sector. Indian entities, including ICICI, HDFC and Kotak, have also launched dedicated property funds.

"The supply-demand situation in real estate shows that what is there is not good enough. Some of the MNCs that are here have a lot of people here, who need world-class housing. Infrastructure is one constraint that India has. In fact, we should see more townships coming up because it is much better to go to the outskirts and build a self-contained city. That's where the FDI investment will come into play," said Kunnambath. The fund has not identified any partners in the real estate space and may work "on a case to case basis".

SG Private Banking was also looking for partnerships in private equity with groups that were already on ground in India. It would be for both domestic and offshore investors and could be a fund of funds structure or co-investments with a fund or invest directly, added Kunnambath.