Mumbai-based Infrastructure Leasing & Finance Services Investment Managers has closed its first real estate and infrastructure-focused vehicle on more than $525 million (€408 million). While a number of vehicles have been raised to invest in Indian property, the new fund is one of the largest raised so far, demonstrating the growing interest in the subcontinent.
The fund sponsors originally had a target of $300 million for the fund. With leverage, the new vehicle will have more than $1.5 billion in purchasing power.
The fund attracted a number of US LPs, including public US pensions, endowments, foundations and corporate funds. According to press reports, the California Public Employees' Retirement System and the Oregon Public Retirement Fund have both committed $100 million to the IL&FS vehicle.
Jack Berquist, co-founder and managing director of the fund's placement agent Presidio Partners, says he was surprised at the number of LPs interested in investing in India.
“We thought it would take a long time to educate investors about India,” Berquist says.“We were surprised by the number of investors already looking at India. We were also surprised at how quickly other investors go up-to-speed on India.”
Shahzaad Dalal, vice chairman and managing director at IL&FS, said in an email that the fund will look for developments larger than 50,000 square meters in the middle-income residential, IT-related office, retail and mixed-use sectors. In certain situations, he added, the fund might look at nearly completed, income-producing properties.
The fund closing comes as interest in Asian real estate, and India in particular, reaches a fever pitch. As a large, English-speaking democracy with a growing gross domestic product, India has drawn some of the world's largest property investors, including Morgan Stanley, Warburg Pincus and Starwood Capital in recent months.
IL&FS is one of the largest infrastructure developers in India and also owns a real estate services company. The firm has also recently launched a joint venture with Mumbai- and Delhi-based Trikona Capital to invest in Indian infrastructure and property. Projects will reportedly include ports, airports, roads and special economic zones.
In addition to investors in the US and India, Berquist says he also sees investor interest in India growing in Europe.
“European institutions are starting to think about Asia,” he says.