BackAditya Birla Real Estate Fund looking to raise Rs1,000 crore
With Rs90 crore investment in Sunteck project, the Rs1,100 crore fund has deployed its entire corpus across 13 deals
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Bengaluru: Aditya Birla Real Estate Fund has invested about ₹ 90 crore in buying apartments in Signia Isles, a luxury residential project of Sunteck Realty Ltd in Mumbai’s Bandra-Kurla Complex, according to two people familiar with the development.
With this, the ₹ 1,100 crore fund has deployed its entire corpus across 13 transactions.
Having invested its maiden real estate fund, Aditya Birla Real Estate Fund, part of Aditya Birla Financial Services Group, is planning to go ahead and start raising its second fund early next year that will invest in residential projects. It is aiming to raise about ₹ 1,000 crore.
Sunteck Realty is developing three luxury residential projects in Bandra-Kurla Complex—Signature Island, Signia Pearl and Signia Isles. Prices in Signia Isles are about ₹ 42,000-45,000 a sq ft. Earlier this year, the Mumbai-based developer acquired another plot of land in the area to develop a premium commercial office project through a joint development model.
“Sales have been good in Signia Isles and we are planning to start delivery of the apartments in the project by mid-2016," said Kamal Khetan, chairman and managing director, Sunteck Realty.
The investment has been made in the form of equity through non-convertible debentures (NCDs).
An Aditya Birla spokesperson declined to comment.
With the Sunteck Realty deal, Aditya Birla Real Estate Fund has done five transactions that involve bulk buying of apartments, said one of the people mentioned above. Both of them declined to be named.
In March, realty firm Ozone Group raised ₹ 150 crore from the fund for its Metrozone project in Chennai, by selling residential stock in the project in a bulk-buying deal. It also bought stock worth ₹ 85 crore in a suburban Mumbai project being developed by Radius Developers in a structured equity transaction.
A clutch of private equity funds have been buying apartments at discounts to market prices over the last year or so as residential sales continued to be slow and developers, in need of capital, were to sell apartments in bulk.
Indiareit Fund Advisors Pvt. Ltd, part of Piramal Fund Management Pvt. Ltd, launched an apartment fund in 2014 to buy apartments in bulk from developers and later in the year. There are other funds such as ICICI Prudential Asset Management Co. Ltd that have selectively done such deals as well.
Real estate fund-raising seems to be on in full steam, going by the number of funds which are on the road to raise money or are planning to do so next year.
Edelweiss Alternative Asset Advisors Ltd, part of diversified financial services firm Edelweiss Group, is raising up to $1 billion for its first residential real estate fund. Housing Development Finance Corp. Ltd (HDFC) has two new offshore funds, a $500 million fund through HDFC Property Fund that will be launched next year and an $850 million fund through another entity which is in fund-raising mode.
“Domestic capital is still easier to raise while raising offshore capital for residental projects remains a challenging and lengthy process. Offshore investors are directly typing up with developers here to invest and many of them remain keen to invest in rent generating office assets," said Rajeev Bairathi, executive director (capital transactions group), Knight Frank India, a property advisory.
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