Indiareit raises $46m for India redevelopment fund
Indiareit Fund Advisors, a real estate investor backed by Indian entrepreneur Ajay Piramal, has raised INR2.5 billion ($46 million) for a fund targeting redevelopment projects in Mumbai. The firm expects to reach a final close of up to INR5 billion in the next two months.
The Mumbai Redevelopment Fund-Series I has been in the market since July, attracting commitments largely from individual investors in major cities, LiveMint reported. This is the only vehicle Indiareit is currently raising, having decided to postpone its rental yield fund.
It was reported in February that the company was planning to launch a $500 million offshore fund that would invest in development projects in India.
The redevelopment projects that will be targeted by the new fund include slums, old housing societies and cessed buildings, which are maintained by the housing authority through a tax or cess levied on the tenants. Indiareit may mitigate the risks involved in such investments by asking the developer for collateral - typically an existing project - worth 1.5x the investment value.
Earlier this month Indiareit committed INR2 billion to a slum redevelopment project in Mumbai operated by Omkar Realtors & Developers. The investment came from Indareit's INR9.3 billion Domestic Fund IV, formed in 2010.
"Since the capital outflow in such projects is less, and much of the initial capital is required only to clear tenants, deal sizes will be restricted to Rs 40-80 crore," said Ramesh Jogani, managing director and chief executive of Indiareit. "We are also looking closely at our first deal and would explore opportunities to invest with Omkar again."
Indareit operates three domestic funds with a combined value of INR19.5 billion as well as a $200 million offshore vehicle.
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