International financial services group JP Morgan is raising a new India-focused offshore real estate investment fund worth close to $500 million, sources close to the development told VCCircle.

A person privy to the development said, “The amount being so huge, it looks difficult that they will be able to raise that much as international investors are taking time to warm up to Indian real estate. They might close it at $300-350 million. The first phase of the fund is up for closing in March this year.”

Sources further added that the fund had already locked three deals with realty developers before it set out to raise money. The deals took place in Mumbai, Chennai and Pune, but details of the project could not be verified.

An e-mail query sent to the company went unanswered.

In August 2006, JP Morgan Asset Management announced its real estate fund, JP Morgan India Property Fund, and raised $360 million to invest in Indian real estate. The fund was mainly raised from institutional investors and high net worth individuals (HNIs) from the USA, Europe, the Middle East and Asia.

When launched, the fund had said it would focus on cities such as Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, New Delhi and Pune, with selective investments in other cities which were emerging as key economic centres at the national or regional level, including Surat, Vizag and Nagpur.

In 2011, it made an investment of $30 million in North India-based realtor Parsvnath Developers Ltd’s residential project La Tropicana. The investment also has a clause of further investment from JP Morgan’s NBFC to invest in the project. Parsvnath raised the money to provide an exit to its existing realty fund Red Fort Capital.

In December 2010, JP Morgan India Property Fund made partial exit of $24.5 million by divesting its stake in a project of B Raheja Builders to K Raheja Group.

This comes as yet another real estate-focused fund in India. Last month, Red Fort Capital, headed by Subhash Bedi, Parry Singh and G B Singh, said it had raised $500 million from overseas investors for a new fund. Since the global meltdown, none of the realty funds had been able to raise significant amount from global investors. Recently, realty and construction major Shapoorji & Pallonji had gone out to raise a realty fund of $500 million, but it is yet to close the fund. Macquarie is the placement agent of the proposed fund.

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