 "ICICI Venture")
After almost five years, ICICI Venture, the largest domestic private equity (PE) firm, is looking to raise a new real estate fund, according to a source.
The fund manager recently got in-principle approval from capital markets regulator Securities and Exchange Board of India (Sebi) and would start marketing the fund in a couple of months, sources said.
According to the source, the total corpus of the domestic fund would be Rs 500 crore and the fund would mostly invest in residential real estate projects.
“Some of their last investments have made returns of 19-20 per cent, which is pretty decent. That's why they are looking to raise a new fund,” the source said.
When contacted, an ICICI Venture spokesperson declined to comment.
A fully-owned subsidiary of ICICI Bank, the fund manager has assets of more than $4 billion under management, under four platforms of investment. These include $1.5 billion in private equity (comprising all four PE funds), $845 million of capital ready for deployment under the power platform launched in a joint venture with Tata Power, $825 million in AION (a special situations fund in a joint venture with Apollo Global Management) and $630 million in real estate.
It has dry powder of $1.5 billion across these funds.
ICICI Venture’s plans come at a time when real estate developers are likely to face a liquidity crunch due to demonetisation, the Real Estate (Regulation & Development) Act and goods and services (GST) kicking in, in the next couple of months.
According to rating firm Fitch, developers’ sales will come down by 20-30 per cent in 2017 and their leverage positions will go up.
“The fund manager can take advantage of the liquidity situation in the industry,” said the source quoted earlier.
In April, ICIC Venture along with Tata Power International, the wholly owned subsidiary of Tata Power, launched an $850-million platform to facilitate investment in power projects.
The platform has investment commitments from Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ), Kuwait Investment Authority, and Oman’s State General Reserve Fund.
In September, ICICI Venture raised $190 million for a sector-agnostic fund.
According to experts, ICICI Venture's new fund is likely to compete with the likes of Piramal, Altico Capital, KKR and ASK group, who are active in deploying funds to real estate developers.
With about Rs 11,000 crore of deals this year, Piramal Fund Management has become the most aggressive lenders in real estate.
In July this year, Motilal Oswal raised Rs 800 crore for its real estate fund.
