Red Fort Capital, a private equity real estate fund, has raised $500 million from overseas investors for its second real estate fund focused on residential properties. It is one of the most significant capital-raising from overseas investors for the real estate sector in more than three years.
Subhash Bedi, co-founder and managing director of Red Fort Capital, confirmed the development to VCCircle via e-mail but did not share further details. Other co-founders are G.B. Singh and Parry Singh.
With the final close of Red Fort India Real Estate Fund II, the New Delhi-based firm will have nearly $900 million under management, making it one of the largest independent private equity real estate investment specialists in India. According to VCCedge, the financial research arm of VCCircle, Red Fort India Real Estate Fund I raised $375 million in 2007.
According to its latest filing with the US regulator earlier this month, Red Fort India Real Estate Fund II had raised $368.5 million on a target of $500 million. The amount had been raised from 22 investors, with minimum commitment amount being $10 million. Park Hill Real Estate Group LLC, which is an affiliate of The Blackstone Group, is listed as a placement agent for the fund. Park Hill Real Estate also advised Red Fort on its first fund.
Of the $500 million corpus, around $400 million had been raised by the fund and another $100 million (approx.) had been raised via co-investment pools, a report in PERE stated without disclosing its source.
The last major fund in the real estate sector came when IL&FS Investment Managers Ltd raised $895 million for IL&FS India Realty Fund II, exceeding the target of $750 million. IL&FS India Realty Fund II, which was closed in December 2008, was the largest sector-dedicated fund followed by HDFC’s $800 million HIREF International.
Post-Lehman crisis, PE investments in real estate sector have taken a hit with overseas investors staying on the sidelines. Most of the fundraising has focused on domestic investors, typically HNIs and ultra-HNIs. Residential realty space has dominated the deal volume during the recovery while commercial real estate deals picked up in value in 2011.
Most of Red Fort Capital’s investments are in the National Capital Region (NCR) and in developers like Parsvnath, Ansal Properties & Infrastructure and 3C. It initially backed projects in cities like Bangalore (with Prestige), Chennai (KG Foundations) and Kolkata (Godrej Properties), but focused on the NCR for the past three years or more. However, it has now started to venture out and recently invested Rs 250 crore in a slum redevelopment project in Malad (Mumbai) by Omkar Realtors and Developers.
What may have also attracted investors to Red Fort is its track record. In March 2011, Red Fort said that it had returned over $100 million to investors since 2009 as its fund I portfolio reached the harvesting stage. In the first quarter of CY2011, the fund exited from four different projects in NCR and Chennai.