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AIG Real Estate may bring another investor in Chennai SEZ, buys RMZ in Hyderabad project

AIG Global Real Estate sponsored its India-dedicated fund, which had a final closing in June 2008 with total capital commitments of $282m.

AIG Real Estate Fund is in active talks to bring in another investor including a private equity fund for its Chennai special economic zone (SEZ) project, Velankani Tech Park, which may see a part or full exit for the realty focused asset management arm of US-based AIG, sources close to the development said.

The investment firm had put money in the SEZ project of Bangalore based realtor Velankani Group In October 2008. The project is located at Sriperumbudur, on the outskirts of Chennai.

The source privy to the development told VCCircle, “Primarily they are talking to investors which have interests in warehousing or in the logistics space.
When contacted, the spokesperson for AIG Real Estate Fund in India declined to comment.

According to the developer’s website, the proposed SEZ with 8.5 million sq. ft. was aimed to provide plug-and-play space for electronics hardware and telecom component manufacturers and IT/ITES companies.

In another development, AIG Real Estate has bought out its partner, the Bangalore-based realtor RMZ, in their Hyderabad residential project.

The source said, “The RMZ exit happened in late December post which they (AIG Real Estate) are now evaluating whether to bring in a developer for the project or to bring in a development manager who would construct the project for a certain fee and incentive structure. Within a period of next six months it will finalise the plan.”

The Hyderabad residential real estate market, which has been dormant for past few years, has seen a pickup in sales in last nine months. The fund plans to tap the high-end segment of the market.

A few years ago, the AIG Real Estate invested close to $200 million in RMZ’s five projects across Kolkata, Bangalore and Hyderabad. The fund, which had the first right of refusal to any investment to RMZ’s projects, saw cracks develop in the relationship.

It had eventually exited most of the investments with RMZ, but was in talks for the Hyderabad project for a reverse move. It had also sent a legal notice to the real estate developer to exit the project and in the last week of December both parties amicably parted ways.

AIG Real Estate had been investing from its India-dedicated fund AIG Real Estate Opportunity - India, L.P. AIG Global Real Estate sponsored the India fund, which had a final closing in June 2008 with total capital commitments of $282 million. The India fund was focused on the development of office, retail, industrial, hospitality and residential projects in targeted areas in India.

The investment firm is not looking to raise any fresh India focused fund.

(Edited by Prem Udayabhanu)