When the real estate market is going through a down cycle, India’s second largest property developer, Unitech Ltd, has raised a $300 million fund from international markets to invest in its various real estate projects – mainly residential. A Business Standard said that this is only half of what the fund – named Unitech International Real Estate Fund – plans to raise in total, which is $600 million. The fund has a lifespan of 10 years.
The Economic Times meanwhile reports that the investors in the fund include a European pension fund, a Japanese bank and some Europe-based HNIs. Switzerland-based investment bank UBS was the placement agent for fundraising. This fund will be similar to Unitech Corporate Park (UCP), who owns Unitech’s IT parks, which in 2006 raised $700 million from London’s Alternative Investment Market.
Unitech group also has domestic funds called CIG Realty Fund I, II, III and IV which have a total corpus of Rs 2,000 crore. These funds are managed by Unitech Realty Investors. Unitech was also reportedly raising a real estate fund in partnership with State Bank of India (SBI).
Even as Unitech is raising its own investment funds, the total private equity fund requirement for the company for its various projects is estimated to be $1 billion. Last month, Lehman Brothers Real Estate Partners invested $175 million (Rs 740 crore) in Unitech’s realty project in Mumbai on the Pune Express way.
Even though Unitech has successfully raised PE funds, its plans to raise capital from public markets had come a cropper. Earlier this year, the company had called off a $1.5 billion qualified institutional placement issue in which it planned to dilute 12 per cent of shares on total paid-up share capital. Last month, it also called off Singapore listing of its office trust, Unitech Office Trust, for which it received approval from the Singapore Stock Exchange. The IPO was expected to raise $700 million.
On Wednesday, shares of Unitech reached its 52-week low of Rs 135 before closing 11 per cent down to Rs 137.