JLL Segregated Funds Group to raise $47M in second fund

Jones Lang LaSalle Segregated Funds Group, the real estate private equity arm of consultancy firm JLL, is set to launch its second fund with a target corpus of Rs 300 crore ($47 million) from domestic investors, the company said.

The fund is christened Scheme Residential Opportunities Fund–II and aims to seal deals across top seven markets of India. It will deploy capital through equity and high yield mezzanine structures in smaller residential projects for quick turnaround.

VCCircle had first reported last year that the fund house has shelved its plan to launch a commercial fund in the second outing and will instead go ahead with a strategy for residential segment.

The fund will also deploy capital towards apartment bulk buying strategy under which it will buy inventory of residential units in projects located at prominent micro markets at a deep discount.

Like the maiden fund, it will deploy capital of Rs 25-30 crore towards every project.

“The core strategy of the second fund will be similar to the first one and will seek investments in projects with smaller development cycle of two and half years,” Mridul Upreti, chief executive officer, Segregated Funds Group, Jones Lang LaSalle Investment Advisors Pvt. Ltd, had told VCCircle last July.

“The tenure of the second fund will be five years and its investment focus will be smaller residential projects. ROF-II will focus on three uniquely identified themes in line with current market conditions  - invest in small residential development projects, invest in NCD's backed by receivables from residential projects and invest in “value dislocated” distressed situations such as buying bulk inventory of residential units,” the company said on Tuesday.

This comes almost one and half years after the firm hit final close of its maiden fund. It had launched the scheme in 2012 with a target corpus of Rs 300 crore but could manage to scoop up only Rs 160 crore.

The fund has also been slow on deploying capital. So far, it has sealed three deals with Bangalore-based Assetz Property (Rs 24 crore), Chennai-based developers Vishwakarma Real Estates & Constructions (Rs 25 crore) and Plaza Group, aggregating to roughly Rs 70 crore.

It is gearing up for second fund even when it is sitting on more than half of last fund's corpus. In fact, it part exited its debut investment in Assetz within a year and claims to have clocked an internal rate of return (IRR) of 30 per cent on it.

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