Indian Realty Funds’ Offshore Flight Hits Air Pocket

At a time when the Indian real sector is facing acute credit crunch, the flight to offshore fundraising by realty funds from the country is facing heavy headwinds. The fund raisers are forced to make emergency landing with revised targets as they have found few takers for their ambitious initiatives.
Some of the important fund raisers who are raising money overseas include JP Morgan, Kotak Realty Fund, Ajay Piramal’s IndiaReit, ASK Property Investment Advisors and Triangle Real Estate Fund. Real estate sources said quite a few of these, such as JP Morgan and construction major Shapoorji Pallonji’s Mauritius-registered real estate fund, received poor response from the Limited Partners.

According to sources familiar to the development, Shapoorji’s maiden offshore realty fund, launched in 2010, is yet to see its first close and has not reached even one-fourth of its target of $500 million. Simultaneously, JP Morgan’s proposed $500 million India-focused realty fund has cut the size by a third to $350 million. “It was planning to close the fund by January but the fund is still open. The company has revised the plan to close it by March-end,” the person added on condition of anonymity.
Amit Goenka, national director (capital transactions) at property consultancy Knight Frank India, says, “Some of the players who went out to raise money have abandoned their plans and come back. The market is very unfavourable and the good old days for big funds are over now. Firms are now targeting $300-400 million at best.”