Indiareit gearing up to launch $500 mn offshore fund

Indiareit gearing up to launch $500 mn offshore fund


Mumbai: Real estate venture capital fund Indiareit is gearing up to launch its second offshore fund by the end of the year.

“We plan to come out with a $500-million fund this time. It will have a green shoe of $200-250 million," Indiareit Fund Advisors managing director and CEO Ramesh Jogani told PTI.

Jogani said both individuals and financial institutions, including insurance and private equity players from the US, Europe, the Middle East, Japan and South-East Asian countries would make investments in the fund.

The minimum investment for individuals would be as low as $0.5 million, while institutions would have to dole out $5 million to get a pie of the fund, to be raised through distributors, he said, adding Indiareit would invest the fund over four years.

“There is a lot of euphoria for Indian real estate sector among the big PE players overseas and the company intends to partner them to become a major player in the country’s real estate sector," Jogani said.

All leading distributors would be engaged to market the fund.

Set up in March 2006, Indiareit Fund advisors came out with a $200 million offshore fund in which major private equity player 3i had invested $40 million. Bulk of the investment in the fund had came from the Middle East while there were private equity investments from Singapore and UK.

Indiareit is looking at deals in which it would invest in excess of Rs200 crore in properties in Mumbai and Hyderabad. It has invested Rs225 crore in Bangalore-based Skyline Constructions and Housing recently.

On the return on investments, Jogani said on an average, funds deployed by Indiareit yield 300% returns and hopes future investments would also bring equal returns.

Upbeat on the real estate sector, Jogani said there are no dampening issues with the real estate sector now in the country and there is enough chance of prices going up much further in the next five to six years in the cities we invest.

Commercial property prices in Mumbai, however, would come down once supply starts coming in the next two to three years , he said adding that in other cities prices would remain stable.