Private equity fund raising at the real estate project level is the flavour of the season. Value Designbuild Pvt Ltd (VDB), a Bangalore-based real estate developer, is raising between $8 million and $10 million from Monsoon Capital at the SPV level for its Balinese-style, high-end villa project, Nusa Dua Phase 2, coming up in IT suburb Whitefield.

Monsoon Capital will take a majority stake in the project while the developer will hold a significant minority. The project, coming up across 15 acres, involves construction of about 150 villa units, part of a gated community, at a total investment of Rs 200 crore. Koshy Varghese, managing director of VDB, confirmed the development while VCCircle could not reach Monsoon Capital for its comments at the time of posting this article.

VDB--a somewhat fledgling and small-sized player in Bangalore which is home to realty majors such as Sobha, Prestige, Brigade, Embassy and so on--is placing major bets on the high-end and luxury segment. “We really believe that there is a market for aspirational homes. We will play in that segment as it also allows us to build a well-designed product,” says Varghese. The firm wants to pitch itself in the Rs 2-4 crore per unit (villa or apartment) residential segment.

VDB is currently building VDB Celadon (a mid-end apartment project in Yelahanka in Bangalore), VDB Cardinal (an upscale apartment complex in Indira Nagar in the city), a villa project in Coorg and the Nusa Dua extension project in Whitefield. Bullish on the luxury segment, Varghese says, even when the slowdown was at its peak, this segment still witnessed business enquiries. 

Monsoon Capital, founded by former ChrysCapital advisor Gautam Prakash, is a hedge fund active in private and public markets. The deal is Monsoon's second bet on the residential realty space as it invested Rs 135 crore in Smile City township project of Ganesh Housing Corporation earlier this year. In 2008, Monsoon formed a JV for an IT park with Anant Raj Industries. The hedge fund has also invested in listed firms like Karuturi Global.

The investment at the SPV level is in line with the current preference for project-level equity by investors. VCCircle had recently reported that Motilal Oswal PE would be investing Rs 50 crore in a Godrej Properties SPV project in Bangalore. Godrej had also similarly raised Rs 110 crore from Milestone Capital for its residential project in Kolkata in October 2009 and from HDFC Asset Management for projects in Tamil Nadu and Mumbai earlier this year. Shriram Properties too recently closed an SPV-level investment of Rs 40 crore from ICICI Prudential Asset Management Company Limited and India Opportunities Real Estate Fund (Mauritius) for its 16-acre residential project in Yelahanka, the northern suburb of Bangalore. A realty sector tracker says, investments at the SPV level are finding favour from the risk mitigation perspective and also the clear-cut exit route for PE investors.

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