Savills-backed RootCorp launches $250m India fund

The global real estate investment firm launched as a partnership between Savills and an Indian conglomerate has begun its second attempt at raising an India-focused real estate fund.  

RootCorp, a global real estate investment manager formed via a joint venture between the Bangalore-headquartered Indian conglomerate Nichani Group and the London-listed property services firm Savills, has launched an India-focused real estate fund.

The joint venture's first fund, the India Debt and Yield Opportunities Fund, is closed-ended and has a $250 million fundraising target. The capital raised via the Mauritius-domiciled fund is being targeted to be invested in yield-driven assets and development opportunities across the residential, commercial and hotel sector in key metropolitan Indian cities as well as in projects in special economic zones.

Additionally, RootCorp also announced that the Sobha Group, a Bangalore-headquartered real estate developer, has also become a shareholder in the company.

RootCorp was launched in 2007 as a partnership between the Nichani Group and Savills. While Nichani Group is a majority shareholder and responsible for fund management, Savills role is centered on providing development consultancy, research, as well as sales guidance.

This is the firm’s second attempt at raising a fund. In 2008, RootCorp launched an Indian real estate fund with a target of around $100 million, but fundraising was soon put on hold following the global financial crisis with both partners deciding to temporarily halt the joint venture.

“There was a pause while the partners waited for the change of regime in India, and a better environment. The partners decided they will wait and see what happens with the Indian macro-economic situation. Now, with the Modi government and significant improvement in the conditions in India, we felt now is the right time to launch a fund, Charles Weston-Baker, Savills International Director told PERE.

PERE understands that the firm is targeting institutional investors, family offices and high net worth investors in Europe, especially Germany and Switzerland, and the Middle East for fundraising for the new fund. The first close for the fund is targeted for the beginning of 2016.

Rootcorp is targeting a three-pronged investment strategy for the fund. One third of the total capital raised will be invested in debt-focused deals, which could be both pure debt as well as structured credit to developers; another one third will be invested in yield-driven commercial assets, and the remaining in opportunistic investments in the residential sector. An IRR target return of 20 percent has been set for the fund.

“The fund seeks to benefit from the enormous opportunities which are abound in the Indian property sector – India requires a city the size of Chicago to be built every year to house its growing population,” said Suresh Nichani, vice chairman of RootCorp.

Going forward, RootCorp plans to establish a global presence, and launch real estate funds in markets outside India such as Europe, Middle East and the US. Its long term target is to have 50 percent to 70 percent of assets under management outside Asia.

Since its inception in 1947, the Nichani Group has invested over $340 million in more than 300 investments, of which 30 were in real estate specifically. The Sobha Group develops over 8 million square feet of property in India annually, and has $14.5 billion worth of property under development in Dubai, according to a company statement.