Saffron Asset Advisors, a private equity player, is planning to launch three new funds — in hospitality, logistics and infrastructure — by early 2010. Ajoy Veer Kapoor, founder and managing director, Saffron Asset Advisors told FE, “We are planning a $500 million infrastructure fund, and will introduce $200 million hospitality and logistics funds. We will source funds through foreign direct investments (FDIs).”
The company plans to enter into real estate deals in cities such as Mumbai, Delhi, Tirupur and Vishakhapatnam, among others, and will hold talks with real estate majors such as Unitech, DLF, Indiabulls and the Lodha Group.
With the 30% fall in the capital markets since January this year, more and more firms are looking at private equity as an alternative fund-raising source. During the first seven months of 2008, PE firms invested $7.44 billion across 248 investments in India. PE firms had invested $14.33 billion during whole of 2007, according to Venture Intelligence, a research service focused on private equity and venture capital activity. According to Kapoor, The Saffron India Real Estate Fund I, launched in February 2008, is raising a $350-450 million unlisted fund, with a hard cap of $500 million. It has done its first close on April 3, 2008 with an anchor investment of $75 million from Standard Life, UK. It is expected to close by the end of 2008. “Following the closure of the fund, Saffron would come out with more funds and invest in real estate and related areas like infrastructure, logistics, warehousing, hospitality and healthcare,” Kapoor added. Further, Kapoor opines, “Although the ongoing inflationary trends are leading to hike in construction costs, real estate property prices will not increase as we feel, that by the middle of next year, inflation will start growing at the rate of 9.5%. In the next three years, the real estate market is expected to see a price correction of about 15%. Many developers have delayed their construction plans, resulting in blocking of investments.” Saffron Asset Advisors currently manages over $425 million and specialises in real estate investments. Kapoor added that since the past one year and eight months, the private equity firm has entered into at least 16 deals.
Source: Financial Express