Indiareit Fund Advisors Pvt., which manages $1 billion in real estate assets, is delaying its $250 million overseas fundraising plan by six months to focus on investing for new clients won earlier this month.
The company, owned by billionaire Ajay Piramal, will start raising money for its offshore fund in September or October, according to Khushru Jijina, managing director at Mumbai-based Indiareit. Indiareit, earlier this month, won a mandate to manage $500 million raised by a unit of Canada Pension Plan Investment Board and Piramal Enterprises Ltd. to provide debt financing to residential projects in India.
“I want to stabilize the existing funds before raising further money,” Jijina said in an interview in Mumbai on Feb. 26. “I will focus on exits and deploying the money already raised before any new fundraising.”
Indiareit has exited 70 percent of its investments from its first three property funds and some of them will complete a full exit this year, Jijina said. The funds have made returns in excess of 20 percent, he said. The company, which raised 10 billion rupees ($161 million) for a fifth fund last month, may raise a sixth fund based in India with a similar amount later this year, Jijina said.
Private equity property funds made 45 investments last year in India, of which 37 had an announced value of $1.4 billion, according to data from Venture Intelligence, a research company that tracks private equity and mergers and acquisitions. That number of transactions was 8.2 percent lower than the 49 investments with 39 disclosed deals valued at $1.2 billion in 2012, the data showed.
Such funds made 24 exits in 2013 compared with 18 in 2012. All of the exits, barring one, were through buy-back of the stake by developers, the data showed.
Home prices across India have declined with cities such as Mumbai posting as much as a 20 percent drop and prices in Gurgaon, the area neighboring the national capital New Delhi, falling by 30 percent, Jijina said. Prices in the south Indian city of Chennai have also slid by 25 percent, he said.
“I am seeing in pockets, developers facing distress and looking to sell off their projects,” Jijina said. “I see more distress this year than last year, which is an opportunity for people with money to buy assets from developers or from banks.”
Indiareit will target four or five institutional investors for its overseas fundraising plan and will seek to raise money in Europe, Southeast Asia and the Middle east, Jijina said.
Ajay Piramal has a net worth of about $1.3 billion, according to the Bloomberg Billionaires Index. Piramal, who sold his Indian pharmaceutical business to Abbott Laboratories Inc. for $3.7 billion in 2010, has been acquiring drugmakers and has made investments in real estate and telecommunications.