Portman Holdings, the Atlanta-based real estate development and investment management company, is eyeing the launch of its first real estate fund for India 15 years after opening an office in the country. PERE can reveal the firm is targeting at least a $200 million capital raising for residential investments in five Indian cities.
The fund is part of a wider push into private real estate investing in India that could see Portman invest a total of $300 million in the country, according to a statement the firm made last year.
The fund, which is still in its planning stages, is expected to be US dollar denominated and be backed by investors with which it has worked before, largely from the US and Europe, although approaching domestic investors is also being contemplated. India’s regulatory regime has only recently become flexible enough to allow funds to target domestic limited partners.
The firm is not expected to make investments in land but in assets already benefiting from planning consent. That is something of a departure from India’s first wave of opportunistic property funds that launched before the global financial crisis when land acquisitions played a big part. While that strategy theoretically stood to generate outsized returns for investors, in reality it often encountered lengthy planning delays and that had a detrimental effect on a fund’s outcome and often for its manager. As such, Portman is pinning its strategy on adding value from the point of development and not from the land acquisition.
Despite adopting a relatively more conservative approach to its debut fund, Portman is hoping to generate opportunistic-style returns of more than 20 percent IRR and an equity multiple of more than 2x – in rupee terms. Over the past five years, the rupee has declined in value by almost 50 percent against the dollar.
While the fund is a first for Portman, the firm has been active in the Indian private real estate market since 1998 when it opened an office in Mumbai. It previously partnered with developers on a case by case basis, primarily assisting on architectural and design matters. However, Portman did not begin actively investing in India until after 2008, and since then has been using capital from its own balance sheet.
Worldwide, the firm has raised and deployed over $6 billion and has developed over 50 million square feet of real estate.