LIC Housing Finance Ltd, one of India’s leading housing finance companies that is currently testing the venture fund waters by partnering with a couple of venture funds, is evaluating plans to float its own venture fund focusing on the realty sector.
LIC Housing has already invested Rs50 crore in Kotak Realty Fund and Rs10 crore in CIG Realty Fund.
The proposed new fund would focus on financing projects such as shopping malls and special economic zones.
“We are currently evaluating our experience in the two realty funds that we haveinvested in,” said S.K.Mitter, chief executive of LIC Housing.
“Based upon the positive outcome, we may float our own venture fund sometime next year. A decision on this would be firmed up in the next couple of months.”
The fund is likely to be about Rs500 crore and Mitter said that the LIC Housing would seek partners such as banks, financial institutions and insurance companies.
“We may even join hands with the existing venture capital fund players,” he added. He declined to say how much of the new fund will come from LIC Housing.
Mitter said his company currently has a networth of Rs1,500 crore and interest income amounted to Rs1,500 crore last year.
“Such long-term funding in the form of realty fund would help the realty developers a lot in leveraging their overall funding and make their projects more viable,” says J.C. Sharma, managing director of Bangalore-based Sobha Developers Ltd.
“There is a long way to go and the industry needs many more realty funds and more funding options to take the India growth story forward.”
LIC Housing has set a target of raising Rs1,000 crore through fixed deposit programme during the current fiscal year.
The housing finance company needs Rs6,800 crore of funds during the current fiscal to disburse as housing loans.
A portion of this would be raised through non-convertible debentures and bank loans, Mitter said.
Source : Livemint