3i-Backed In­di­areit plans to raise $622 mil­lion for three prop­erty funds

The Pak Banker - - Company& -

NEW DELHI: In­di­areit Fund Ad­vi­sors Pvt., a real es­tate ven­ture cap­i­tal fund backed by 3i Group Plc, plans to raise about $622 mil­lion in three new funds that will in­vest in In­dian prop­erty across the nation's ma­jor cities.

In­di­areit plans to raise $400 mil­lion for an off­shore fund, as well as a 6 bil­lion ru­pee ($133 mil­lion) rental yield fund and a 4 bil­lion ru­pee do­mes­tic debt fund in the year start­ing April 1, Chief Ex­ec­u­tive Of­fi­cer Ramesh Jo­gani said. "In­dia is a great place to be in, it's a great story where de­mo­graph­ics are right and gross do­mes­tic prod­uct is grow­ing at 8 per­cent," Mum­bai-based Jo­gani said in an in­ter­view yes­ter­day. "If you stick to the ba­sics and do it right, I think it's a great place to make a lot of money."

Pri­vate-eq­uity firms in­vested about $1.24 bil­lion in 34 deals in In­dia this year, ac­cord­ing to a study by Ven­ture In­tel­li­gence, a re­searcher based in the south In­dian city of Chen­nai. That's a 69 per­cent in­crease from the same pe­riod last year with 22 in­vest­ments val­ued at $735 mil­lion, it said.

In­di­areit, started in 2006, ad­vises on funds worth about $850 mil­lion that in­vest in real es­tate in the In­dian cities of Mum­bai, Chen­nai, Ban­ga­lore, Hyderabad and Pune. 3i, Europe's largest pub­licly traded pri­vate-eq­uity firm, is a cor­ner­stone in­vestor in In­di­areit's $200 mil­lion off­shore fund, Jo­gani said.

Com­mer­cial real es­tate is pick­ing up as rentals have risen and of­fer re­turns of 12 per­cent, com­pared with res­i­den­tial prop­erty, which yields be­tween 2 per­cent and 3 per­cent, he said. Mum­bai is the fourth most ex­pen­sive of­fice mar­ket in the world, ac­cord­ing to a CB Richard El­lis Group Inc. re­port last month, and New Delhi was ranked 11th. "I see a huge play for in­vestors and funds in com­mer­cial, though no one is ready to touch it with a barge pole as of now," Jo­gani said. "I don't see the over­sup­ply in com­mer­cial con­tin­u­ing for long. The sup­ply will be so quickly lapped up that one will feel they missed the boat."

Jo­gani ex­pects prices to " cor­rect" in some hous­ing mar­kets such as Mum­bai, Delhi and Pune. In­di­areit in­vests in metropoli­tan cities with about 70 per­cent in­vested in res­i­den­tial prop­erty and the rest in of­fice spa­ces. In­di­areit is in­tro­duc­ing the new funds at a time when costs at real es­tate com­pa­nies are ex­pected to rise af­ter a bribery probe that led to the ar­rests of eight bank and bro­ker­age ex­ec­u­tives last month re­lat­ing to pref­er­en­tial treat­ment to de­vel­op­ers. -Bloomberg

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