First Eagle Capital Advisors Pvt. Ltd, the asset management firm floated by former ICICI Venture executive Sudarshan Bajoria, is aiming to hit first close of its maiden real estate fund around Rs 200-250 crore ($30-37 million).
Bajoria, a former co-head of real estate investments at ICICI Venture and managing director at First Eagle, said that the Alpha Advantage Real Estate Fund has a target corpus of around Rs 500 crore with a green shoe option of an equal amount. It hopes to hit the first close in a couple of months, he said.
The fund is mostly tapping into domestic limited partners to scoop up the capital. "Given the relaxation in norms, we are not averse to roping in offshore investors. But a large part of our LP base will be in India," said Bajoria.
Bajoria has joined hands with Jaydev Mody, owner of casino operator Delta Corp, to float the firm. Mody will extend his real estate expertise to the firm as non-executive chairman while Bajoria will run the day-to-day operations.
Mody is credited with developing Mumbai's Crossroads Mall as well as Peninsula Corporate Park and Peninsula IT Park during his tenure with Peninsula Land. Bajoria has 15 years of experience in asset management and worked at Reliance Industries Ltd besides ICICI Venture.
Bajoria said Mody's presence will help the company in differentiating good deals from the average ones once the fund hits first close and the process of deploying capital begins.
The maiden fund will back mid-income residential projects across top realty markets of India with a ticket size of Rs 60-100 crore. It will pick up stakes in special purpose vehicles (SPVs) developing projects through equity instruments.
Bajoria’s fund has hit the market at a time when equity money is making a gradual comeback in real estate. Equity deals were the norm of the day in the go-go years of real estate in 2005-2008. After the global financial crisis, investors turned risk-averse and started backing projects through the safer debt route. Now, debt transactions dominate deal activity by PE firms and non-banking financial companies (NBFCs), though equity investments have shown an improvement lately.
First Eagle joins firms such ASK Property Investment Advisors, Motilal Oswal Real Estate and Indiabulls Alternative Asset Management in raising capital for the real estate sector.
Investor-cum-developer Brick Eagle recently entered the AIF space for its maiden domestic real estate fund. It aims to raise a total of Rs 500 crore to invest in affordable housing projects in tier II and III markets in India. Another new entrant in the space is IM+ Capitals Ltd, an asset management company controlled by consultancy firm Rudrabhishek Enterprises Pvt. Ltd. It floated a real estate-focused fund to back developers by making equity investments in residential projects.
The year 2015 turned out to be a record year for real estate as the sector attracted a total of $2.8 billion equity capital, according to VCCEdge, the data research platform of VCCircle. The momentum slowed a bit in the first half of 2016 with real estate managing to pull in $1.65 billion in debt and equity capital compared with $3.27 billion a year earlier. Sequentially, capital flow dropped in the second quarter of 2016 to $795.30 million from $850.72 million in the first quarter, the data showed.
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