Essel Group launches Rs 500-crore real estate private equity fund

BANGALORE: The Subhash Chandra-owned Essel Group has launched a Rs 500-crore real estate private equity fund, a person with knowledge of the development said. "The Securities & Exchange Board of India has approved and given licence for category II AIF (alternative investment fund)," the person said, adding that it will be close ended and have a four-year tenure.

The fund, India Asset Growth Fund series I, has been launched under Essel Finance Managers, the group's private equity business. Amit Goenka, managing director and chief executive of Essel Financial Services, the holding company, confirmed the creation of the fund but did not give any details.

According to the person quoted earlier, the fund has a target net internal rate of return of over 20%. It will primarily invest in urban residential real estate projects across Mumbai, NCR, Bangalore, Chennai, Pune and Kolkata. The ticket size of the investment will range from Rs 75 crore to Rs 100 crore. Under Sebi rules, category II AIFs do not get any specific incentives or concessions from the government or any other regulator.

These funds are close ended, cannot engage in leveraging and have no other investment restrictions. The fund, with a greenshoe option of Rs 500 crore, achieved first close of Rs 200 crore earlier this year, the person said, adding that Essel plans to launch by mid year a $100-million offshore fund that will co-invest with the domestic fund.