DLF is looking at setting up a Rs 800-crore venture capital (VC) fund with a mandate to invest in companies engaged in equipment management and construction activity. This is being seen as a strategic move by DLF to support its rapidly expanding construction activity.

The Delhi-based firm has filed the documents with market regulator SEBI seeking approval for setting up the VC fund. DLF rejected to comment beyond this because the matter is under SEBI process.

The realty boom of the past three years has rapidly changed the scale at which realty firms worked in India. Companies have seen unprecedented growth and have taken up projects several times the size they had done in the past, requiring manpower, equipment and management skill on a completely new level.

DLF, India’s largest real estate firm, has been a leader in taking up bigger projects and executing them at a rapid pace. It constructed 9 million square feet of space in the last fiscal and plans to complete 16 million square feet this year.

It has set a target of 22 million square feet for the next fiscal. With such an ambitious target on mind, DLF needs a strong support infrastructure in place. The company has already been focused on strengthening its execution capabilities and significantly improves its performance.

A venture capital fund is only going to augment DLF’s effort towards quicker execution. The fund will invest in small companies which will manage equipment, construction material and manpower. The VC-funded companies may buy advanced equipment, critical for fast execution and then lease it to DLF for construction. Similarly, these companies can independently manage construction material and manpower and become a solid source of supply to DLF, whose operations have now spread across the country.

These VC-funded firms, which are likely to have long term agreements with DLF, will have the flexibility to put to use their men and material by offering them to other developers.