Fire Capital, the first private equity fund focused on the Indian real estate sector , plans to increase $100 million to capitalize in housing projects. The company will increase the money initially from its existing investors in the US to invest in tier-II and tier-III cities in states like Haryana, Punjab, Rajasthan, told the CEO Om Chaudhry.
“There is an intense scarcity of residential projects, as India would require at least another 30 million homes by 2012 to fulfil the existing housing need. We want to cut some bit of the demand and supply gap in small towns and accommodate to the middle income segment,” he said. Majorly homes are needed in the mid and lower income group. Fire Capital, established in 2004, raised its first fund worth $121 million in 2006, with an ability to invest around $250 million through the co-investment commitments of its investor base. All the funds are almost over. It is raising the additional amount to built 25-50 acres with each builder in small towns this financial year.
The real estate sector in the country was one of the biggest effected area of the global economic recession in 2008-09 as buyers kept away from the market and banks became panicky about giving loans. Although recovery in the sector is gaining speed, but the amount of debt in the industry is a big concern. According to industry estimates, real estate firms have built up a total debt of about 75,000 crore. Property developers are increasingly approaching private equity firms to complete both existing and new projects besides repaying a part of their debt.