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Indiabulls’ PE unit looking to raise Rs 1,500 crore in realty fund




Indiabulls' PE unit looking to raise Rs 1,500 crore in realty fund

This is Indiabulls Asset Management’s maiden commercial property fund after raising two residential real estate funds totalling Rs 1,500 crore over the past two years.

MUMBAI: Indiabulls Asset Management Company’s private equity arm is looking to raise Rs 1,500 crore through its new real estate fund Dual Advantage Commercial Asset fund (DACA), said a top company official.

This is Indiabulls Asset Management’s maiden commercial property fund after raising two residential real estate funds totalling Rs 1,500 crore over the past two years. The new fund will have a tenure of five years with an option of two extensions of one year each. The company is looking to raise the total corpus, including co-investments of Rs 500 crore, through institutional investors, HNIs and family offices.

“We believe this is a good time to enter the commercial property market, given that most office markets are in the rental growth phase and the next 3-5 years will see robust rental and capital value appreciation through cap rate compression. Indiabulls Dual Advantage Commercial Asset Fund is a lo gical extension of our successful residential investment strategy and compliments the overall expertise enjoyed by the Indiabulls Group across real estate development, banking and financial services sectors,“ said Akshay Gupta, Group executive head & CEO -Indiabulls Asset Management Co.

The Dual Advantage Commercial Asset fund will be looking to invest in pre-leased office assets. It will seek investment opportunities in top seven commercial markets in the country , including Mumbai, DelhiNational Capital Region, Bengaluru, Pune, Chennai and Hyderabad.

“Our commercial investment strategy intends to provide downside protection through recourse to completed asset, returns through existing rental yields and capital appreciation on exit. The fund will target to achieve higher returns by implementing various strategies like the opportunity to bring rentals to market parity, repositioning asset to achieve higher rentals and innovative leverage and tax structures to plug leakages.“ said Ambar Maheshwari, CEO -Private Equity, Indiabulls Asset Management Company.

The fund will be targeting gross pre-tax internal rate of returns in the region of 1617%. The average ticket size for investments through this fund will be in the range of Rs 100 crore to Rs 200 crore. The fund will look at commencing its exits from investments from the fourth year following the conclusion of fund raising.

Indiabulls AIF is registered as a category II Alternative Investment Fund under the provisions of Securities & Exchange Board of India (Alternative Investment Funds) Regulations, 2012, and has been set up as a trust. The AIF platform has so far raised Rs 1,500 crore and has deployed Rs 1,000 crore across residential strategies.

The fund will also be raised through this platform. Indiabulls Group will be the sponsor of the fund and Indiabulls AMC will be the investment manager of the fund.

Indiabulls Asset Management Company, the investment manager of the proposed fund, is also managing Indiabulls Mutual Fund since October 2011. As on 31st December 2016, IAMC had 10 mutual fund schemes (Debt – 7; Equity – 3) with assets under management (AUM) of Rs 10,226 crore.

AIF category II funds allow retail investors to participate in funds such as these with minimum contribution of Rs 1 crore. However, Indiabulls Asset Management Company is targeting investors who would make larger investments.

Demand momentum in office absorption, witnessed over the past two years, is expected to continue this year as well. India’s top 8 property markets are likely to witness stable office space net absorption in 2017 at around 30-31 million sq ft, said a recent Cushman & Wakefield report.

Despite concerns on the impact of any adverse impact of the US President’s policies on outsourcing, strengthening business confidence, stabilizing global concerns and an optimistic economic outlook for India are likely to infuse confidence into occupiers, steering net office absorption across property markets. Net absorption will gather pace in the second half of this year and is expected to continue to gain momentum for the next four years. These property markets include Mumbai, Delhi-NCR, Bengaluru, Pune, Ahmedabad, Hyderabad and Chennai, the Cushman & Wakefield report added.


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