Indiareit Fund Advisors Pvt Ltd, the real estate private equity arm of Piramal Enterprises, has made a final close of its Domestic Scheme V within two months of crossing the original targeted corpus. 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.
In a short span of a few weeks since, the fund has continued to witness a steady level of applications resulting in a final close taking place just prior to the end of the year, Indiareit said on Wednesday.
Billionaire Ajay Piramal, the promoter of Piramal Enterprises, has brought in Rs 50 crore in the fund. The domestic fund has been raised from high net-worth individuals besides some family offices.
Khushru Jijina, managing director, Indiareit, said, “Despite reaching a final close and hitting our hard cap limit of Rs 1,000 crore, we have had to turn away applications in recent days that saw the fund being oversubscribed by more than Rs 100 crore. At the same time, we are witnessing very healthy levels of deal flow and are able to pick the best transactions given the real estate market dynamics, our preferred position and ability to commit relatively quickly.”
He said the firm has already committed a quarter of the corpus or roughly $40 million.
Talking to VCCircle, Jijina said, “We plan to deploy the entire fund by March 2015.”
The fund would be committing 40 per cent of the corpus by March this year and it expects to undertake repeat transactions with its existing developer partners.
The fund is targeting structured returns and had already deployed 10 per cent of the corpus or Rs 100 crore in its first deal where it is betting on joint venture between Ashiana Homes and the Landcraft Group.
The project is located in Sector 88A, Gurgaon with access from the existing Pataudi Road, and will benefit from upcoming developments, including the under construction Dwarka Expressway, and the fast growing New Gurgaon region. The land parcel is spread across 14 acres with a potential saleable area of around 1.5 million sq ft. The investment is structured to provide an assured minimum return along with an equity kicker.
The fund has also approved two new transactions, including a Rs 60 crore investment into a residential project in Mumbai besides a Rs 90 crore investment in Bangalore. The investment committee has approved the investment and the final closure is expected by March.
The fund will also make commitment of 10 per cent of the fund in a project of its own project development arm called The Address Makers. The development arm has recently soft launched its second residential project in Whitefield and expects to launch another project in six months in Electronics City in Bangalore. Its first project under this banner was launched in Sarjapur last year and it has sold 45 per cent of the space in the project.
(Edited by Joby Puthuparampil Johnson)