Mumbai: At a time when realty is going through a sharp downturn, Milestone Capital Advisors Pvt. Ltd, a local real estate fund with about Rs2,500 crore under management, has nearly doubled its core team to strengthen post-investment capabilities.
At the top: Milestone Capital MD Ved Prakash Arya.
In the past three months, Milestone Capital has hired 20 people with expertise in nurturing investments, strengthening its core team to 44 employees—apparent at the crowded mezzanine floor of Orchid Hotel in Mumbai’s Santa Cruz, where the fund has set up office.
Its peers, however, rely on a lean team of 5-10 experts who handle investment functions.
“All these are personnel with specific expertise, say, in engineering, architecture, mall management, facility management, green technology, sustainable development or marketing,” said Ved Prakash Arya, managing director of Milestone, which was set up two years ago. “They are here to ensure a continuous revenue stream through the value-added services they provide to our partner developers, post-investment.”
Typically, real estate funds such as HDFC Property Fund, ICICI Venture Funds Management Co. Ltd’s realty fund, Kotak Realty Fund and Indiareit Fund Advisors Pvt. Ltd provide funds for development, get on the board of the company, and outsource most post-investment activities to consultants such as Knight Frank India Pvt. Ltd.
“Once you mount the horse, you need to ride it too,” said Pranay Vakil, chairman of Knight Frank India, the local arm of global property consultant Knight Frank Llp. “Milestone’s is a unique model in India, where everything is done in-house.”
The advantage, Vakil pointed out, is that the fund will have 100% control over its investments, and be able to use the in-house team for feedback on future project evaluations. “It also presupposes an adequate amount of work in order to keep all the people busy,” he added.
That’s a concern expressed by the head of a rival US-based real estate fund. This fund, which has been active in India, said that in the US, it relies a lot on in-house expertise for post-investment activity, but in India, these functions are outsourced to project management companies or handled by the developer himself.
“Also, the carrying cost of employing such staff when the markets have slowed down is considerably high, and we don’t want to be in a situation where we will have to ask people to leave,” the head of the fund said, but didn’t want to be named as his firm competes with Milestone.
Navin Kumar, chief marketing officer of Milestone, however, said the fund doesn’t face such concerns. Milestone has fully committed the money raised in its first two funds—the Milestone Domestic Scheme I and the IL&FS Milestone Fund I—in at least 10 projects across the country.
Currently, Milestone is raising a $400 million (Rs1,912 crore) offshore fund, though Kumar admits it’s not been easy because of the global financial turmoil and liquidity crisis.
“Further, at some stage, we hope to spin out these nurturing initiatives into different entities that can look at additional business from other funds,” Kumar said.
Milestone Ecofirst Advisory Services (India) Pvt. Ltd is already a separate entity, formed through a joint venture between Milestone and Ecofirst Plc. of UK, which advises on sustainable development for land use and buildings.
“The other nurturing arm, which is into facilities management—ensuring that commercial properties and malls are in shape, wear and tear is taken care of—will also be spun out,” said Kumar.