Pantaloon realty fund to raise Rs 2500 crore

Funds will be raised in tranches from India and abroad

PFH Investment Advisory Company, the realty asset management firm backed by the Pantaloon group, is in the process of lining up fresh investments worth Rs 2,500 crore for the booming Indian retail sector. The investment will be raised as two separate funds - Rs 500 crore from domestic investors and $450 million from international investors.

The dollar fund, to be called the Horizon International Fund, will be launched by end December this year or early January next year, while the smaller domestic fund, Kshitij Venture Capital fund, is expected to be launched by March 2006.

Last April, the company had raised its first fund of Rs 350 crore from domestic investors and high networth individuals (HNIs), which has been deployed to create 7 million square feet of mall space in Ahmedabad, Vadodara, Indore, Cochin, Coimbatore and Chennai, valued at Rs 1,071 crore.

The funds will be deployed exclusively in developing malls in tier II and III cities, primarily in western and southern India.

On the anvil are mall developments in cities like Ahmedabad, Surat, Baroda and Rajkot in Gujarat; Coimbatore, Chennai, Madurai, Salem and Tiruchi in Tamil Nadu; Cochin, Thiruvananthapuram, Calicut and Kottayam in Kerala;and Ranchi, Vizag, Jabalpur and Mysore.

Typically the developments would be in the range of one to two million square feet of space, said Shishir Baijal, chairman and managing director of PFH Advisory.

In each of these cities, PFH is looking at acquiring properties over 25 acres in size which can be developed into a "city of markets". Baijal said: "We will be moving away from the concept of high rise malls to create a sense of unhurried lifestyle-centred spaces with other developments like hotels, commercial complexes, offices and residences coming up along the periphery of these malls."

PFH is scouting for partners among international investors to develop hospitality, commercial, residential and convention facilities around the malls. The concept plan for the "city of markets" is being developed by US-based Callison International.

The company is also launching a mall management service that will manage the upcoming plethora of malls as well as offer mall management services to other mall owners. This company too is likely to be launched in January 2006, Baijal said.

According to a study by Crisil, the Rs 35,000 crore Indian retail sector is expected to grow by around 40 per cent each year over the few years.