India Infoline’s wealth management arm raises $118M realty fund, mandates Indiareit to manage

In what would be one of the first instance of a domestic private realty fund being managed by a third party investment firm, India Infoline Wealth Management Ltd (IIFL WML) has mandated realty investment firm Indiareit Fund Advisors (Indiareit) to manage its mint fresh real estate fund.

IIFL WML, the wealth management arm of financial services firm India Infoline, has raised Rs 735 crore ($118 million) for the new fund. It has an option to co-invest a further Rs 500 crore, under the IIFL Income Opportunities Fund-Series Special Situations, an alternative investment fund dedicated to real estate sector.

Karan Bhagat, managing director and chief executive officer, IIFL WML, said, “We are pleased to  have raised this pool of capital at a time when there are extremely attractive opportunities for a structured yield participation in residential development.”

The fund was launched in August 2013 and it is the third under the alternative investment fund under India Infoline.

It will chase income producing assets by participating in structured financing across the residential asset class. The closed ended fund has four year tenure and an 18-month deployment period.

Khushru Jijina, managing director, Indiareit, said, “Whilst we have successfully managed offshore third party mandates, this is a first for us in the domestic market wherein we have agreed to act as an advisor to the IIFL Income Opportunities Fund.”

The fund is targeting gross returns of 22-24 per cent and has an average investment ticket size of Rs 50-75 crore. The hurdle rate is 12 per cent for the fund.

It will mark 25 per cent of its investment in next two months as it is already vetting transactions. The fund will invest in Bangalore, Mumbai and Delhi-NCR markets.

Jijina added, “This fund has shorter life span than our existing ones and has an average maturity of 2-3 years, but if there are projects which would chase four year timeline then we have the option to co-invest from our fund V.”

Indiareit Fund Advisors Pvt Ltd, the real estate private equity arm of Piramal Enterprises, made a final close of its Domestic Scheme V early this month. The fund, which had a targeted corpus of Rs 1,000 crore (including a greenshoe option of 250 crore) or around $160 million, was oversubscribed. The firm had earlier made an interim close of the fund at Rs 300 crore in August and said it has crossed the basic fund size of Rs 750 crore in November  by getting commitment worth Rs 800 crore.

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