Protego Real Estate Investors has launched the Protego WIRE Indian Office Development Fund. The fund will seek to raise up to $150 million (€105 million) in equity by February 2008, with further closings expected to take it to between $300 and $400 million.
The Fund will invest primarily in office development projects in tier one and tier two cities in India. Protego is highlighting that the Fund will focus on developments that will be built to international building standards and specifications, as the Fund will be targeting major international corporates to be tenants, who would be seeking similar standards and specifications as they would expect to find in Europe or the US.
Protego’s is partnering with WIRE Commercial Partners, a subsidiary of Singapore-based property firm WIRE Group. WIRE will be responsible for the management of the developments, carried out from WIRE’s operations in India.
The firm said net target returns for the Fund are expected to be in the region of 25 percent irr. The Fund will be structured as a closed ended fund with a seven year life, with an option to extend.
Protego says it will also be launching an Indian office standing investment fund around June 2009. That fund will work in conjunction with the development fund, having the option to acquire the completed developments at the market valuation, once they are completed. That fund will also have the capacity to acquire assets from outside of the development fund.
“What is happening in India at the moment is nothing short of astonishing,” said Charles Weeks, Head of Business Development at Protego. “From a real estate perspective there is huge primary demand from international corporates for quality office space – driven primarily by the cost benefits from outsourcing global IT and IT Enabled Services businesses to India, coupled with an extensive and highly educated labour force. It is estimated that demand for space will increase at between 30% and 35% pa compounded for the foreseeable future.
Weeks said Protego were introduced to WIRE through a corporate finance house based in Singapore with whom they have been working closely in defining Protego’s Asian strategy. He also saod WIRE has arranged a number of strategic partners to the fund, in order that the Fund can mitigate, as far as possible, the risks normally associated with investing in India. The strategic partners include, “a major US contractor which built a significant part of Silicon Valley,” who will oversee the standard, quality and technology of build to ensure that it is appropriate and suitable for the end users. He said Wire has already signed an agreement with one of India's largest construction and engineering organizations.