IIFL's PE arm to enter realty with Rs 500-cr fund

MUMBAI: IIFL Venture Capital Fund, the private equity arm of the India Infoline group, is close to raising Rs 500 crore for investing in real estate. The fundraising will mark the brokerage’s foray into the private equity business.

The fund, which has raised the money from high net worth individuals, will focus on investing in residential properties in top cities, a top official said. “We are in the process of raising funds for domestic real estate market. The response has been very encouraging,” said Balaji Raghavan, CEO and CIO of IIFL Alternate Asset Advisors.

He declined to divulge further details. IIFL Venture joins the list of real estate private equity funds, which have been looking to raise money to invest in properties across the country. Recently, Red Fort Capital raised $500 million, Kotak Realty Fund raised over Rs 523 crore from domestic investors to invest in high-yield debt instruments of real estate properties.

Ajay Piramal’s IndiaReit Fund Advisors and ArthVeda Fund Management, a unit of DHFL, are also said to be in the process of raising funds, according to reports.These private equity firms look to lend to cash-starved real estate companies.

“There is an immediate funding requirement for developers who want to finish their projects but are facing liquidity issues. Funds like these are looking to lend these developers backed by collateral. Funds are looking at equity or equity-linked hybrid structures which may provide assured returns,” said Raghavan.

About a dozen real estate players are looking to raise funds through initial public offerings to repay debt and finance land purchase, but have kept such plans on the backburner because of the weak market sentiment.