Financial services firm Infrastructure Development Finance Company Ltd (IDFC) has crystallised its plans to augment the real estate portfolio with a separate investment team looking at commercial real estate as an asset class.
This team will invest in real estate assets this year and it will eventually manage a new real estate fund which will be separate from its existing private equity and project equity funding business that largely targets core infrastructure.
According to a source privy to the developments, “To begin with, IDFC will invest in equity from its own account and based on the success of those investments, will approach LPs for raising real estate-specific fund in the next 12 months’ time.”
According to him, IDFC is planning to make 3-4 key investments this year before starting its road show for raising the real estate fund. This will be IDFC’s first real estate fund and it plans to raise a big corpus for the same.
At present, IDFC is building its real estate team and has already started vetting deals from developers.
IDFC struck first such deal late last year with DLF. Last December, it paid Rs 200 crore to Galaxy Mercantile Ltd as a first tranche of a larger transaction worth Rs 450 crore where IDFC would be buying out the entire holding of DLF Home Developers Ltd (a wholly owned arm of DLF Ltd), which owns 71 per cent in Galaxy Mercantile. Galaxy, a JV between DLF Home Developers and IDFC, owns an IT park in Noida.
This was the first investment by IDFC as part of a strategy to invest into a portfolio of yield-generating office infrastructure assets in major markets around the country.
Chetan Dave was hired in June 2010 to build and develop a portfolio of infrastructure-focused real estate assets and a real estate private equity fund management business. He is currently based in Singapore and looking at fundraising options. Dave was earlier heading Sun-Apollo Real Estate Fund and had helped the company raise $630 million. Earlier, IDFC had also hired Nimesh Grover, a senior member from UBS-Raheja private equity joint venture.
IDFC, which has diversified beyond its core infrastructure lending business with expansion into mutual fund and stock brokerage, also has a large alternate asset management business. This is run under three units – IDFC Private Equity Fund which manages a corpus of $1.3 billion, IDFC Project Equity which manages the India Infrastructure Fund with a current size of $927 million, and IDFC Projects, the development finance arm of IDFC Ltd.