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Indiareit closes INR10bn domestic fund

The Indian real estate investment manager has hit its fifth fund’s final close target in just over six months after its re-launch.

Indiareit Fund Advisors, the Mumbai-based real estate investment arm of domestic conglomerate Piramal Enterprises, has closed its fifth domestic fund on its INR10 billion (€118 million; $160 million) target, PERE can reveal.

The rupee-denominated fund was launched in early 2012, and held a first close in April that year. However, when Khushru Jijina took over as managing director in October, the firm then chose to put fundraising on hold to focus on exits. The fund was only brought back to market in July 2013, raising INR3 billion by August 2013. The firm brought that number to INR8 billion by November. Most of the fund’s capital at final closing came from high net-worth individuals, according to an Indiareit spokesman.

In a departure from typical Indian real estate funds which attract numerous high net-worth investors committing small amounts of equity, Indiareit’s vehicle has attracted larger checks from fewer wealthy individuals. Indeed, the ticket size of some commitments to Indiareit Domestic Fund V was as high as INR200 million, according to the spokesman.

“Despite reaching a final close and hitting our hard cap limit of INR1000 crores we have had to turn away applications in recent days that saw the Fund being oversubscribed by more than INR100 crores,” Jijina, said in a statement.

The fund’s strategy follows that of its predecessors and is focused on investing in Tier I cities, primarily in the residential sector. The fund’s exits will be based on self-liquidation or through fixed IRR repayments from the developer, according to the firm’s website. Most important will be the protection of minimum returns through a structured equity strategy, Jijina told PERE.

So far, Indiareit has realized INR10 billion of exits altogether. The first two funds in the domestic series, with a total of INR10.2 billion in combined capital, are expected to be fully divested by 2015. Those two funds and the firm's $200 million offshore fund are all 67 percent realized at this point, Jijina added.

As of now, Indiareit has already committed 25 percent of Fund V's corpus across three development projects in Mumbai, Bangalore and Gurgaon. Jijina added that the fund is expected to reach 40 percent committed by March, given its pipeline.

The fund close is the latest action in a busy few months for the investment manager. In August, Indiareit also closed its Mumbai Redevelopment Fund on its INR5 billion target. That vehicle is mandated to invest in late stage redevelopment projects. The firm also continues to fundraise for its second $300 million offshore fund.

India has also become the focus of a large amount of international institutional investor activity in the past half year. In August, the Abu Dhabi Investment Authority committed $200 million to Kotak Realty Fund’s latest offering. GIC Private followed in November with a $473 million commitment to a business space development, and the Canada Pension Plan Investment Board made its first real estate investment in the country by forming a $250 million joint venture with a local conglomerate.