Essel Group makes first close of maiden realty fund at $37M

Subhash Chandra-controlled Essel Group, which recently entered the private equity business, has marked the first close of its maiden real estate-dedicated fund called India Asset Growth Fund, a top company executive told VCCircle.

Amit Goenka, managing director and CEO of Essel Finance, said, “It is a Rs 1,000 crore fund. We have now raised Rs 200 crore and have marked the first close of the fund.”

The first tranche of fund commitment came almost entirely from the promoters including a few family offices and other group companies.

The fund will essentially invest in residential projects across six key cities of the country including Mumbai, Gurgaon, Bangalore, Chennai, Kolkata and Pune. It will also look at Hyderabad for further investment. The fund is looking to undertake last-mile investments, secondary deals and bridge capital investments in the form of debt investments, and is also targeting internal rate of return (IRR) in the range of 20-22 per cent.

According to a source, the fund has already started deploying capital and is looking to make three transactions from the money raised in the first close. These include a deal in Chennai worth Rs 40 crore, involving local developer Hallmark Infrastructure. Hallmark was looking to raise close to $20 million last year for its residential projects.

The fund is also investing close to Rs 80 crore in Mumbai and the deal will be closed this week. The third transaction worth Rs 60 crore is for a Gurgaon-based project. The fund has also built a pipeline for investments worth Rs 300 crore or so, which it will start deploying by the end of this month. It hopes to raise the required capital for these investments in the next two months.

Goenka, however, declined to comment on these investments.

The domestic real estate fund will also see foreign co-investment worth $150 million, which will be activated in the next 3-4 months.

The fund is also looking to bring in Pranay Vakil, Anil Khandelwal, Jairaj Purandare, Anil Harish and Mukund Chitale as advisors on the board.

(Edited by Sanghamitra Mandal)

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