India’s largest real estate developer DLF Group is planning to come up with a Rs 800 crore ($200 million) venture capital fund, The Economic Times reported. The company has filed documentation with SEBI, which also regulates venture capital activity in the country, and the application is under process. The fund will invest in companies engaged in construction activity and equipment management. The funded companies will help DLF in faster execution of its construction projects, as they can buy the advanced equipment, and then lease it to DLF.
Also as DLF is expanding its presence across the country these firms can become an important part of its value chain. DLF has plans to construct 16 million square feet this year as compared to 9 million square feet last year. In the next fiscal it plans to construct 22 million square feet. The funded firms can manage construction material and manpower independently and become a solid source of supply to DLF. Also they can continue their independent business by offering their services to other developers.
DLF Assets Pvt. Ltd. (DAPL), which is independent of DLF Ltd, is the property fund of the company which was set up for bidding along with other companies in potential assets sale by DLF. DAPL was planning a Singapore listing in June after its plans for a domestic float called off due to weak market conditions. Its plans for a Singapore listing, which was to raise $2 billion, were also deferred and the company is awaiting for suitable market conditions. DAPL has raised $450 million from Symphony Capital, a London based investment firm in May this year.
The company has also recently announced a buyback of shares after losing more than 70 per cent of its market capitalisation. The company planning to spend around Rs 500 crore on the buyback programme, which will result in around 1 crore shares (0.6 per cent equity stake).
Recently there have been several funds have been launched focusing on the Indian real estate market. Also it has been reported that SBI, India’s largest bank is to tie up with an affiliate of Unitech to float a private equity real estate fund. ICICI Venture Fund Management is also raising a $1.5 billion real estate fund. Deutsche Bank has also launched RREEF Alternative Investments which will invest more than $1 billion over the next three years in the growing Indian real estate.