Mumbai: Indian private equity firm IL&FS Investment Managers Ltd has raised $895 million (Rs4,403 crore) for a new realty fund, tapping global investors despite the global financial turmoil and falling property markets.
The firm, one of India’s oldest private equity players, is also pulling money together for the first tranche of an Asia infrastructure fund, which it hopes to close in about a month, chief executive Archana Hingorani said.
Optimistic: Archana Hingorani, chief executive of IL&FS Investment Managers Ltd.
The realty fund, the second IL&FS fund focused on the real estate sector, exceeded its initial target of $750 million. It has commitments from two sovereign wealth funds, US pension funds and university endowments, Hingorani said on Tuesday.
“The current market situation and capital scarcity provide valuable opportunities,” she said. “We are of course leaning towards residential and office space. We are not bullish on retail at the moment.”
Real estate demand in India has slackened, first due to high interest rates and prices, and then as tightening credit and an economic slowdown hit demand for homes and office space, while a supply glut has hurt retail.
“We expect to deploy the funds over the next 18 months,” Hingorani said, adding the real estate sector may take longer than 18-24 months to emerge from the slowdown.
IL&FS has already made four commitments worth between $25-50 million each in residential and industrial projects, she said. It has fully deployed the $525 million it raised under its first real estate fund in April 2006, and some of the projects are nearing the divestment stage, she said.
The Indian government has said the country needs about $500 billion to upgrade its overburdened infrastructure, including roads, bridges, rail lines, ports and power plants, with about 30% of the funds expected to come from private sector firms.