MUMBAI: IL&FS Investment Managers (IIML), one of the country’s oldest private equity funds, plans to invest $300 million, or around Rs 1,400 crore, in real estate and urban infrastructure projects by the end of 2010.
The PE arm of Infrastructure Leasing and Financial Services (IL&FS), with $2.8 billion assets under management, has already invested an equal amount in the last six months and evaluating some of the big-ticket projects for investment in the country, said a senior official.
“We are in the advance stages of finalising 3-4 deals in residential real estate and urban infrastructure space like roads and hospitality,” said IIML vice-chairman & MD Shahzaad Dalal.
According to industry sources, IIML has recently made commitments for an equity investment of Rs 110 crore in Palais Royale, a 75-storey luxury residential tower being built by Vikas Kasliwal-owned Sree Ram Urban Infrastructure. The project may entail investments of around Rs 1,800 crore, which is scheduled to be completed in the next two years.
With global economic recovery and the government implementing infrastructure-development projects, developers have revived their plans and investment has started picking up. “Largely, domestic funds houses and India-dedicated funds have shown major interest in the recent past,” said Arun Natarajan, managing director & CEO of Venture Intelligence. So far, the size of the deals was $10-50 million. Industry experts believe big-ticket investments will happen in the sector. “We expect the trend to continue this year and more inflows from domestic as well as overseas fund houses,” said Mr Natarajan.
Domestic funds such as IIML, ICICI Venture and Kotak Private Equity have dedicated funds for local projects. According to Venture Intelligence, India-dedicated funds have invested nearly $530 million in real estate projects in the first quarter of the current fiscal. However, investors are cautious in selecting the projects.
“Unlike commercial real estate, where demand is still subdued, housing and infrastructure sector have become more lucrative and expected to provide good returns in the present scenario,” said Anuj Puri, chairman & country head of Jones Lang Lasalle Meghraj, a global advisory firm.
IIML, through its sector-dedicated funds with $1.4 billion assets under management, has invested in projects being developed by Ackruti City in Mumbai, Ansal SEZ Projects in Gurgaon, QVC Realty in Bangalore and ETL Infrastructure Services in Chennai.
Last month, IIML’s joint venture real estate fund with Milestone Capital Advisors picked up 74% stake for Rs 575 crore in a corporate park being developed by HCC Real Estate in Mumbai. It has another active fund in the region fund with Standard Chartered Bank — Standard Chartered IL&FS Asia Infrastructure Growth Fund. “Further, depending on the scope and prospects, the company could explore options for more such funds,” said Mr Dalal.