Indian private equity firm IL&FS Investment Managers Ltd has raised $895 million for a new realty fund, tapping global investors despite the global financial turmoil and falling property markets.
The firm, one of India’s oldest private equity players, is also pulling money together for the first tranche of an Asia infrastructure fund, which it hopes to close in about a month, Archana Hingorani, chief executive said.
The realty fund, the second IL&FS fund focused on the real estate sector, exceeded its initial target of $750 million. It has commitments from two sovereign wealth funds, U.S pension funds and university endowments, she said.
“The current market situation and capital scarcity provide valuable opportunities,” she said. “We are of course leaning towards residential and office space. We are not bullish on retail at the moment.”
Real estate demand in India has slackened, first due to high interest rates and prices, and then as tightening credit and an economic slowdown hit demand for homes and office space, while a supply glut has hurt retail.
“We expect to deploy the funds over the next 18 months,” Hingorani said, adding the real estate sector may take longer than 18-24 months to emerge from the slowdown.
IL&FS has already made four commitments worth between $25-50 million each in residential and industrial projects, she said.
