ASK Group has announced the first close of its offshore real estate focused fund at $50 million. It got commitments from three investors—which include family offices, fund of funds and institutional funds—for the first close.
The offshore fund, which has a target corpus of $200 million, is advised by ASK Property Investment Advisors (ASK PIA), the real estate private equity firm of Mumbai-based financial services group. It will invest in mid-segment residential realty projects in top five cities — Mumbai, Pune, Chennai, Bangalore and Delhi-NCR.
Sunil Rohokale, MD & CEO, ASK Group, said, “The current fund raising environment is challenging but the fact that the ASK group has raised this offshore money in tough times proves that investors are willing to associate with a group having sound & focused investment strategy with a superior track record of performance.”
“While fundraising will gain momentum after our first close, we will be actively looking at investing in projects. We will be investing over Rs 500 crore in the next 12 months in Pune, Bangalore and Chennai,” he added.
The first investment from the fund would be closed by March this year. It has already vetted the deal and is in the process of completing the same.
The fund house will chase large institutions, pension & endowment funds, fund of funds and family offices for raising the remaining $150 million. ASK Group tapped investors in Asia, the Middle East and Europe to raise the first tranche of the fund corpus. In the second phase, it is also looking to tap the US market.
The fund is not looking to chase sovereign capital or endowment funds for its fundraising drive, as some of the other realty funds have done for their offshore funds. It is aiming to raise the entire amount by March 2015.
The new fund has a hurdle rate of 11 per cent and a conventional fee structure with management fee of 2 per cent and 20 per cent performance carry. The fund, which has a lifeline of nine years, plans to generate 2x in terms of returns.
According to Rohokale, “We are not keen to invest in Mumbai in 2014, we might look at investing in Hyderabad once the new government is in place and Telangana issue is resolved. If we do any investment in Hyderabad then it would happen from the offshore fund.”
The offshore fund’s average investment ticket size is around $20-25 million each.
ASK Group plans to close two investments from the offshore fund in CY2014 and other deals will happen from the existing domestic fund.
The group manages real estate assets and investments worth Rs 1,800 crore domestically through its two funds and debt structured investments. The group had already committed the entire money from its first realty fund worth Rs 340 crore and has committed around Rs 600 crore of the second fund, which has a corpus of Rs 1,000 crore, and expects to exhaust the fund by the end of the year.
It has also marked exits worth Rs 145 crore from the first fund and is targeting to pull out Rs 120-150 crore more from previous investments from this fund.
Indiareit, which recently completed fund raising for its fifth domestic fund, is also looking to hit first close of its offshore fund this quarter.
(Edited by Joby Puthuparampil Johnson)