Investment group Inno Group Holdings Ltd is raising a new, fifth fund to develop a housing project near Chennai, after investing around $65 million (around Rs.362 crore today) so far in hotel and housing projects in India.
The new Rs.150 crore fund will be raised from overseas investors, mostly high networth individuals (HNIs) in Belgium. The firm, which has separate investment, real estate and advisory units, has a capital commitment of about $200 million from its investors.
Inno Group, set up by Belgian nationals of Indian origin, Rajamannar Ramaswamy and Sajid Sathak, functions as a private equity (PE) fund and is also developing real estate projects on its own.
Ramaswamy, group managing director, said the company has so far raised four separate funds to invest in various projects since 2007.
“We are looking to buy one land parcel near Chennai, but we haven’t decided what kind of housing we want to do there,” he said.
Property analysts said that raising global capital of any amount is very difficult in the current scenario when a number of private equity (PE) funds are struggling to bring in money for Indian real estate projects.
Ambar Maheshwari, managing director, corporate finance, at property advisory Jones Lang LaSalle, said most funds have been unable to raise overseas capital because of the weak macro-economic scenario as well as the fact that not many global funds have generated good enough returns from Indian real estate investments in the past.
“Even raising money through managed accounts, where investors know where their money is going into, will not be easy because foreign investors don’t trust the fund managers and the investment scenario is not positive,” said Maheshwari.
Inno Group intends to strengthen its real estate development portfolio, and has decided to develop projects on its own.
Under Inno Real Estate Pvt. Ltd, the company launched Inno Geo City, a 131-acre township project near Chennai, and has sold 450 apartments in the first phase.
“We are looking to develop residential projects, of 30-60 acres in size, in southern India,” said Ramaswamy.
Also, it will launch more such township projects under the Inno Geo City brand that may have both mid-income and high-end apartments.
Instances of PE funds getting into full-time real estate development are not new.
Fire Capital Fund ventured into pure-play real estate development when, late last year, the management tied up with US-based professionals to launch Astrum Homes to provide middle-income housing.
“As a fund, we primarily offered investment expertise but Astrum Homes gives us an opportunity to bring development expertise to the table and our investment skills of locating the right piece of land,” said Om Chaudhry, founder of Fire Capital and chairman of Astrum Homes.
Source: www.livemint.com
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