Piramal revives offshore realty fund with pruned target, raises $50M

Piramal Fund Management has revived its offshore real estate fund after pruning its target size further after ceasing fundraising trail few months ago. It has already raised raised $50 million (around Rs 300 crore) for the fund christened 'Indiareit Offshore Fund-3', a top company executive told VCCircle.

The total fund size is targeted at $150 million (Rs 915 crore) and is expected to close by March next year.

This is the third time the fund size has been cut. Originally it was targeting $500 million which was pruned to $350 million and thereafter to $250 million early this year, post which the fund was put in the back burner.

The investment firm has raised the initial commitment from European institutional investors.

It will target real estate projects in tier I markets of India including Delhi NCR, Mumbai, Chennai and Bangalore. The fund will co-invest with Domestic Fund V of Piramal Fund Management, and will have an investment sweet-spot between Rs 100 crore and Rs 150 crore.

Domestic Fund V which has assets under management of Rs 1,000 crore, currently has dry powder of Rs 500 crore.

“Before March, we will be launching Domestic Fund VI as I expect to exhaust my remaining funds,” says Khushru Jijina, managing director at Piramal Fund Management.

Piramal Fund Management is the consolidated realty investment arm of Piramal Capital. Early this year, diversified cash rich company Piramal Enterprises’ financial services arm Piramal Capital had combined its real estate private equity fund management business known as Indiareit and its real estate and allied sectors’ focused NBFC into an integrated vertical, targeting funding opportunities within real estate and allied sectors.

The integrated entity provides exposure to real estate across the entire capital stack—i.e. private equity, structured/mezzanine equity, structured debt, senior secured debt and construction finance.

Piramal Fund Management also has a 50:50 joint venture with Canadian Pension Plan Investment Board (CPPIB) with total commitment of $500 million to invest in residential properties.

The fund manager has just announced that it has raised Rs 500 crore for its Indiareit Apartment Fund which has a targeted corpus of Rs 700 crore. The fund has already committed Rs 125 crore across real estate projects in Mumbai and Chennai.

Offshore Funds

Private equity firms have in the recent past banked on domestic funds to run their investment pipeline. The policy paralysis and economic slowdown over the last few years coupled with lack of exits in the realty markets had forced LPs to rethink on investing in Indian funds.

Many PE firms have struggled to raise money overseas and few have stretched their fundraising programme while others have either cut the target size or scrapped it altogether.

As reported by VCCircle, recently IDFC Alternatives has also revived its proposed offshore realty fund.

In the recent past some funds have reached interim or final close by roping in foreign LPs. These include Kotak raising $400 million offshore realty fund and ASK Group hitting first close of its first offshore fund.

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