Piramal targets healthy exits, plans new residential fund

Bangalore: Piramal Fund Management Pvt. Ltd is planning to sell investments worth $100 million this year and may start a fund that will invest in residential properties.

Piramal Fund Management, a part of the Ajay Piramal Group, is looking at a 100% return of capital across two of its early domestic and one offshore fund within the next year or so.

“This year will see the first exits from Domestic Fund Scheme IV ( ₹ 922 crore) which was raised in 2010 thereby starting the process of exits from the fund’s portfolio within a span of four years. In 2013-14 we had committed to securing ₹ 1,000 crore of exits and we made good on that commitment over the past year,” said Khushru Jijina, managing director (MD) of Piramal Fund Management.

The fund is looking at exiting some of its investments when private equity (PE) funds are under pressure to return money to investors. Many funds that were raised in 2006-07 are under contractual obligation to return money to investors as they reach the end of their lifecycle.

Piramal Fund Management, set up in 2014 by combining Indiareit Fund Advisors Pvt. Ltd and non-banking financial company Piramal Finance, manages around ₹ 7,554 crore and has disbursed ₹ 2,925 crore so far.

Since April, it has approved around ₹ 2,000 crore worth of transactions, including debt financing and equity investments, and intends to commit ₹ 600-800 crore of capital every month.

“We expect to maintain the same run rate in terms of transaction flow,” said Jijina.

In its first transaction from a joint investment venture with Canada Pension Plan Investment Board (CPPIB), Piramal has invested ₹ 110 crore in a luxury residential project of Advance India Projects Ltd in Gurgaon. In February, Piramal and CPPIB set up a $500 million real estate finance company in India to provide debt financing to real estate projects.

“The transaction is representative of the investment focus of the platform—provision of project-level high-yield debt financing to top tier, local developers with a strong track record of execution,” said Jijina.

Advance India’s chief financial officer Nishit Khandelwal said that the capital has been raised to pay off ICICI Venture Funds Management Co. Ltd, which had invested ₹ 70 crore in the project in 2012, and use the rest of it for project development.

This year, Piramal has raised a ₹ 1,000 crore Domestic Fund Scheme V and has been appointed to manage India Infoline Wealth Management Ltd’s new ₹ 780 crore real estate fund in a unique instance where a domestic fund is managed by a third party.

From Fund V, Piramal has invested ₹ 100 crore in a project of Ashiana Homes Pvt. Ltd in the National Capital Region (NCR) and ₹ 50 crore in Skylark Mansions Pvt. Ltd’s Bangalore project.

There would be two more investments in Mumbai, one in Bangalore and another in Chennai.

Towards the year end, it is planning Fund VI, a domestic fund of around ₹ 500 crore, that will again invest in residential projects even though its overseas fund-raising plans remain undecided.

Exits and returning money to investors will be a key focus of the company, said Jijina, who took over as managing director of Indiareit Fund Advisors in September 2012, and had temporarily stalled raising the ₹ 500 crore Mumbai Redevelopment Fund to focus on exits that year.

Property analysts said that Piramal’s real estate fund management business has one of the largest resources available among India-dedicated funds, which gives it an edge in a tight liquidity scenario.

“Besides demonstrating the ability to repeatedly go to the market to raise money, showing longevity and sustainability of the business during a time when most funds haven’t really raised a series of funds, they are entrepreneurial in nature with institutional backup,” said Ambar Maheshwari, MD, corporate finance, at property advisory Jones Lang LaSalle India.