Bangalore: IIFL Domestic Series 1, the private equity (PE) fund of the India Infoline group has invested Rs.115 crore in two residential projects in Mumbai and Gurgaon, said a top executive.
The fund invested Rs.80 crore in the Spire World project in Gurgaon being developed by Millennium Spire Ltd and Rs.35 crore in a project by Ruparel Realty in Mumbai suburb Chembur.
Both projects are under construction.
These are the second and third investments from IIFL’s Rs.700-crore fund, which invested in a central Mumbai slum redevelopment project of Sheth Creators Pvt. Ltd earlier this year. The fund was raised during the course of late last year and this year.
“Both the investments are in projects that are in the affordable price category and are fast-moving products,” said chief executive Balaji Raghavan.
The fund’s strategy is to invest Rs.40-80 crore each in 11-12 deals so the “risk is diversified”, Raghavan said.
The Chembur project, Ruparel Orion, is a 200,000 sq. ft development with the apartments priced at around Rs.10,000 a sq. ft.
It is one of the many central Mumbai projects that Ruparel Realty is currently developing, after the company kicked off its operations with projects in Navi Mumbai.
Amit Ruparel, managing director, Ruparel Realty, said the company only recently started raising money from institutional investors.
“This money will be used in developing the project, which will be ready in three years time,” said Ruparel.
The Gurgaon project is larger with around 850,000 sq. ft of development, and its apartments have price tags of Rs.30-50 lakh.
Ashish Bhalla, managing director, Millennium Spire, confirmed the fund-raising but didn’t give more details.
Sizes of PE deals in the real estate sector, on an average, are shrinking not only because funds are more cautious but also because they want to do more variety of deals than be invested in just a few large projects, say property consultants.
“Even within the residential space, mid-market products with more affordable pricing are attracting most investors. They realize that these projects occupy a chunk of inventory in the market and those at a Rs.40-80 lakh price range get genuine buyers,” said Raja Kaushal, managing director, BNP Paribas Real Estate and Infrastructure Advisory Services Pvt. Ltd.
On Thursday, Tata Housing Development Co. Ltd said it had raised around Rs.62 crore from US-based Portman Holdings Llc. for a 26% stake in a luxury housing project in Bangalore, the first time it is entering into such a deal with a PE firm.
PE funds have invested around $262.25 million (around Rs.1447 crore today) in residential projects so far this year, compared with $247.24 million in all of 2011, according to VCCEdge, a research platform.
Going forward, IIFL’s fund will continue to explore similar residential deals in large cities such as Bangalore and Delhi-National Capital Region for investments, Raghavan said. Also in the pipeline is a second fund that it may launch around April.