Godrej Properties Ltd said on Monday it has created a real estate funds management unit that has raised a $275 million pool of capital with Dutch pension fund asset manager APG Asset Management NV as the lead investor.
The unit, Godrej Fund Management (GFM), will advise investors in Godrej Residential Investment Program II (GRIP II) on investments into a residential development platform with Godrej Properties in India, the company said in a stock-exchange filing.
VCCircle had reported about Godrej's plans for a new platform deal with APG in December.
GRIP II is a follow on to the $200 million residential development platform GPL had set up with an APG-led investor consortium in 2012. The Indian company will hold a 20 per cent stake stake in GRIP II, it said.
The company has named Karan Bolaria to head GFM. He will be responsible for managing both series of the residential investment programmes as well as any future strategies that GFM will undertake, it said.
Pirojsha Godrej, managing director and CEO at Godrej Properties, said the new platform will help attract high-quality long-term equity investors to partner with the company in its projects. "This fits well with our strategy of deepening our presence across the country's leading real estate markets while maintaining a capital-light development strategy.â€
Sachin Doshi, managing director and head of private real estate investments for Asia Pacific at APG, said that, in spite of a general slowdown in the asset class in the country over the past three years, their partnership projects have sold well.
Godrej Properties didn’t comment on details of its limited partners but people close to the development said that the fund has seen participation from a bunch of affluent and super-rich Indian and Dutch individuals.
The investment platform will take up residential projects in top six to eight realty markets on the lines of its previous such collaboration. It exhausted the last corpus in July last year when it bought an 18-acre land parcel from Purvankara in Bangalore to develop a mid-income housing project. Its portfolio under the platform includes four developments with one each in Bangalore and Mumbai and two in Delhi-NCR.
The developer has scooped up a follow-on corpus at a time when its focus has shifted towards residential developments from commercial. In fact, its game plan is to monetise commercial assets and pump the money into residential projects, besides reducing debt.
Godrej had in 2012 set up a $200-million platform with APG for residential projects
In a slow market, Godrej has managed to clock healthy sales on the back of recent launches. In the October-December period, it sold 93 per cent of the inventory it launched in The Trees, in Mumbai’s Vikhroli suburb, taking its booking value for the quarter to about Rs 1,200 crore.
APG has reposed its confidence in Godrej at a time when global investors are flocking back to Indian real estate. According to VCCEdge, the data-research platform of VCCircle, capital flows into the sector in the first nine months of 2015 surged to a seven-year high of $2.5 billion from $1.3 billion a year earlier as large pension funds and financial services giants queued up to tap into the long-term potential of the market.
Several large global asset management and pension funds have increased their exposure to the Indian realty market through the so-called platform deals where they directly collaborate with developers as opposed to backing a realty-focused fund.
A joint investment platform, which allows an investor to back a bunch of projects to be taken up by a developer, has emerged as an important tool of deal-making in real estate private equity.
Goldman Sachs recently sealed a platform deal with Nitesh Estates to develop commercial assets in the country. In the residential space, Singapore’s sovereign wealth fund GIC has tied up with Brigade Group to develop projects in South India.