Third India Realty Fund to be launched by IL and FS PE with target of $ 500M

IL&FS Investment Managers Ltd (IIML), the country’s largest home-grown private equity firm by assets under management (AUM), is scripting a new realty fund, according to sources close to the development. The public-listed PE fund manager, which has AUM of $3.2 billion, will launch the IL&FS India Realty Fund (IRF) III with a targeted corpus of $500 million in the current financial year.

The targeted size of the new fund is much smaller than the second fund called IRF II, which raised a humongous $895 million. IRF II was launched in 2007 and had a target corpus of $750 million. But it managed to raise a higher corpus when the market was at its peak. The second fund has managed gross returns of 19.9 per cent per annum across two divestments.

A wealth manager privy to the development said, “The Company has decided to raise a smaller fund as managing a large fund has become tough since its average deal size is of $20-30 million.”

According to sources, the company’s management has shared with its investors that the fund requirement in Indian realty is not as large as its peers in other countries and thus, the PE firm would like to stick to small-sized deals.

An e-mail query sent to the IIML spokesperson did not elicit any response.

IML scrip declined 1 per cent to close at Rs 27.15 on the BSE, in a strong Mumbai market on Monday.

The firm had raised its maiden realty fund IRF I in 2006 with a corpus of $525 million, which was fully invested. From the second fund, it has invested in more than 30 deals, spanning projects across the country. Going forward, it wants to invest in the same deal size bracket (up to $30 million) from its next fund.

As per its website, IIML currently has six real estate funds with $2 billion under management. Besides its own funds, it operates a few joint venture real estate funds including IL&FS Milestone Funds I and II, along with Milestone Capital.


Piramal Realty Acquires Gulita For 452 Cr From HUL.

Piramal Realty has acquired Gulita – property in south Mumbai from Hindustan Unilever for R452Cr. Piramal Realty is planning to develop high-end luxury apartments on the one-acre land and Ajay Piramal might keep a part of it for his personal use, given the premium location, according to ET.

Gulita is a one-acre property in Worli Seaface, which used to house a training centre and private residences of senior executives of Unilever’s Indian arm.

Gulita was built in 1968 and the land was taken on a perpetual lease from the Brihanmumbai Municipal Corporation–the Mumbai civic authority. The property was put on the block after the company set up a new campus in the suburbs of Andheri and shifted its training facilities there.

Since HUL put the building on block, it has attracted several buyers which included Anil Ambani, Gautam Adani, Oberoi Realty and Sahara.

Last year, Piramal Realty acquired a plot of land in Mumbai from Mafatlal Industries Ltd for about R760Cr. Khushru Jijina – MD of piramal Realty said that the company plans to develop five residential projects in Mumbai at an estimated investment of about R1500Cr. The company will develop about 30 million sq. ft. through land acquisitions funded from its own sources.

Recently in real estate space, Housing Development and Infrastructure Ltd sold 2 acre plot in Mumbai to Adani Enterprises for R900Cr to repay its debt. Ascendas Property Fund Trustee Private Limited, the Trustee-Manager of Ascendas India Trust (a-iTrust) has acquired two operating Buildings in Hitec City 2 Special Economic Zone in Hyderabad, India, from Phoenix Infocity Pvt Ltd for R176.5Cr; while IL&FS Investment Managers bought Logix Group’s four office buildings in Noida for R600Cr.



IL&FS Plan To Invest In Real Estate

IL&FS private equity is planning to increase its investment in infrastructure and Real Estate sector by the end of FY10.

They announced to increase their investment from 660 million US dollars to 1 billion US dollars in the infrastructure sector. In the realty sector they already have investments of 1.6 billion US dollars. They are planning to take deals in both the sectors as well.

Mr Shahzad Dalal, Vice Chairman of IL&FS Investment Managers Ltd said, “We will invest close to a billion dollars in infrastructure as well by about the end of this financial year.”

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In the realty sector the firm has spent 1.2 billion US dollars from the total investment on over 30 deals. It is said that they are now looking at 10 more. The left over amount is expected to be deployed by the end of this year mainly in residential space along with commercial.

The company recently bagged a deal in the real-estate segment through IL&FS Milestone Fund in HCC’s Real-Estate project ‘247 Park’ for Rs 575 cr for a 74 per cent stake.

Mr Dalal further added, “The outlook is fairly bullish on both Real Estate and infrastructure. We believe there are a lot of opportunities. There may not be many good projects, but because of our reach and reputation, we do see some really good projects.”