ICICI Venture is planning to launch a $222mn (Rs.1,000-crore) domestic real estate fund. It plans to close the fund in 6-12 months and will invest in projects in top five to seven cities. It was also looking to launch an offshore fund by the end of this year.
Sanjeev Dasgupta, president, real estate, ICICI Venture, confirmed the plans but said that the exact amount is yet to be decided.
He said that a domestic fund offers a lot more flexibility, as offshore funds are restricted by FDI norms. It is also difficult to raise an offshore fund in the current environment. Dasgupta said a number of projects which were not FDI-compliant were available at attractive rates now.
ICICI Venture has $550 million (over Rs 2,500 crore) under management in domestic and offshore real estate funds.
Norms stipulate that for FDI, real estate projects should have a minimum built-up area of 50,000 sq mt, besides a minimum capitalisation of $10 million for fully-owned subsidiaries and $5 million in case of joint ventures.
ICICI Venture has decided to scale down the ticket size of investments from the domestic fund to Rs 50-100 crore from Rs 300-400 crore earlier and reduced the life of funds from seven-eight years to five years. This is to return the capital to investors as early as possible.
With its latest fund, ICICI Venture will join a long list of fund managers and developers that are launching domestic funds. Fund houses such as Ajay Piramal group-promoted Indiareit, Aditya Birla Financial Services, Motilal Oswal and developers such as Unitech and Ackruti City are either planning or have launched property funds worth a total of Rs 7,500 crore.
Source: Investing Contrarion