Valmark Infra and Realty Trust, promoted and sponsored by Tejraj Gulecha, one of the main promoters of the Bengaluru-based Valmark and Manyata group of companies has launched Valmark Realty Fund-Scheme I to raise up to a maximum of Rs 125 crore ($23 million).
The proposed fund will seek to pick large minority stakes in residential projects in Bangalore.
Fund plans an investments size between 15 to 20 per cent of the fund in a single project which would mean an average ticket size of Rs 20-25 crore. The fund’s preferred hurdle rate of return will be 15 per cent a year, compounded annually, and the profits after achieving the hurdle rate will be shared in the typical private equity format with 20 per cent going to the sponsor and investment manager.
The fund, registered as a close ended Alternate Investment Fund Category II as per new SEBI norms, would raise money by issuing units to domestic investors with a minimum investment of Rs 1 crore. The investment will be through equity, equity linked and debt investments in the projects.
“We are planning to make small ticket investments in at least 5 to 7 projects through this fund as we don’t want to be majority stake holder. Ideally, we want to fund 20 to 30 per cent of the project funding needs and would look for projects with lower risk,” said Vikas Munoth, member of the investment committee at Munoth Financial Services Limited, the investment manager to the fund. IL&FS Trust Company Limited is the trustee of the fund.
The promoter group has brought in Rs 25 crore as sponsorship money for the fund and the firm is looking to finish fund raising by the end of May 2013, said Munoth.
The fund is already vetting investment proposals and may invest in an ongoing project The Greens comprising 1278 apartments spread on a 12 acre land. The project is being set up by Indya Estates.
“In its initial launch, the residential project has already managed 950 bookings. We are expecting to fund the project in the range of Rs 20 to 25 crore and the drawdown is expected begin in another 7-8 weeks,” Munoth added.
Simultaneously, Valmark is also planning to launch Valmark Realty Fund – Scheme II which will be a focused debt fund. The size of this second fund will also be Rs 125 crore, where the promoter group is likely to commit Rs 25 crore. The Valmark Group is a real estate company focused on projects in South India.