Indiabulls plans to raise Rs 1,000 crore via its second real estate fund
MUMBAI: Indiabulls Asset Management Company’s private equity fund is planning to raise 1,000 crore through its new real estate fund Indiabulls High Yield Fund, including a green shoe option of 500 crore, said a top company official. This is Indiabulls Asset Management’s second real estate fund after raising and deploying the first fund in the past one year.
Indiabulls Real Estate Fund (IREF) had raised 600 crore under its first alternative investment fund scheme and has deployed it completely during the same period over four transactions.
The new fund will have a four-year tenure with an option of extending it by a year. Indiabulls High Yield Fund will seek investment opportunities in top 8 residential markets in the country, including Mumbai, Delhi-National Capital Region, Bengaluru, Pune, Chennai, Hyderabad and Ahmedabad.
“We will be targeting grade A developers and micro markets that are expected to witness price appreciation and better sales velocity for investments, as we did with our first fund. The deal pipeline looks robust and we would be making investments with a target of 21%-23% annualized internal rate returns,” said Ambar Maheshwari, CEO Private Equity, Indiabulls Asset Management Company.
The first Indiabulls Real Estate Fund had also invested in residential projects across Mumbai, NCR, and Bengaluru through non-convertible debentures (NCDs) with a targeted internal rate of return of over 20%.
“This is the right time for fund raising as developers continue to look for structured financing. We will be investing in the project after it gets established in terms of construction and sales momentum. There will be a mixture of deals, but we will predominantly stick to this approach,” said Akshay Gupta, CEO, Indiabulls Asset Management Company.
Indiabulls AIF is registered as a category II Alternative Investment Fund under the provisions of Securities & Exchange Board of India (Alternative Investment Funds) Regulations, 2012, and has been set up as a trust.
Indiabulls Housing Finance, a flagship company of the Indiabulls Group, is the sponsor of the Indiabulls High Yield Fund and Indiabulls Asset Management Company is the investment manager of the fund.
Indiabulls Asset Management Company, the investment manager of Indiabulls Real Estate Fund and Indiabulls High Yield Fund, is also managing Indiabulls Mutual Fund since October 2011. As on March 31, 2016, IAMC had 10 mutual fund schemes (Debt – 7; Equity – 3) with average assets under management (AUM) of Rs 5,300 crore.
The revival in interest among private equity investors, especially in real estate sector, seen over the past year seems to be continuing into this year as well, said industry experts. Both domestic as well as foreign players have been looking to invest in the property market. Foreign private equity players have a large appetite for commercial office space as it comes with lower associated risks and higher yields, whereas domestic players appear to be betting big on residential projects of reputed developers.