Anand Rathi Financial Services and property consultancy are planning to launch their second real estate fund by end of this months and looking to raise around Rs 500 crore (~$100 million), sources close to the development told VCCircle.
Unlike its peers who are hitting foreign shores to raise new funds, the joint fund rental yield and appreciation portfolio (RYAP) fund will be raised from the domestic market. Like its predecessor, it will invest in commercial assets in tier I cities which include Mumbai, Pune, Bangalore, National Capital Region (NCR) and Chennai.
The fund would be targeting returns of 10-12 per cent from its investments and expects to stay invested in an asset for four-five years.
A senior executive of the joint venture fund house who did not wish to be identified, said, “We are waiting for final Alternate Investment Fund (AIF) guidelines as right now there is no clarity on registration of funds and other norms. Once we have clarity on the same which we are expecting by mid-May we will register and start our fund raising process.”
On April 2, markets regulator Securities and Exchange Board of India (Sebi) had unveiled its final norms to regulate AIF’s in the country. Fund managers expect the detailed guidelines to be issued in the next two weeks.
Knight Frank India and Anand Rathi Financial Services had joined hands two years ago to raise Rs 225 crore rental yield fund. It has invested Rs 135 crore from the existing fund in two projects including Hubtown Ltd’s commercial project in Mumbai and Cerebrum IT park development by Pune-based Kumar Urban Development Ltd.
Other real estate investment firms raising rental yield funds include JM Financial's Infinite India Investment Management, Ajay Piramal-promoted IndiaReit fund and Bangalore-based Azure Capital.
Since last year, most of the international and domestic real estate funds have marked big ticket investments in buying out rental yield assets. Recently international investment firm Xander’s PE arm acquired Chennai-based commercial IT Park asset of Appaswamy Real Estate Ltd’s called Futura, for $40 million.
VCCircle estimates peg private equity deals worth as much as $380 million were sealed in pre-leased properties in the past six months -- a little less than half of the total private equity investments in the realty sector during the period.
Anand Rathi and Knight Frank would join a slew of fund houses on the road to raise realty-focused funds to invest in India. The total pipeline is estimated at close to $5.5 billion at present.