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According to sources in the know, the offshore fund will raise investments from high net worth individuals and other investors from the UK and will have an investment threshold of $0.5 million and above.
However, employees of the consultancy can invest smaller limits and the fund will invest in FDI-complaint projects in the country, according to sources. The fund-raising is expected to begin by January 2008 and will close in a couple of months.
Rutley Capital Partners (RCP), Knight Frank's real estate private equity and investment management arm, is expected to spearhead the launch of the India fund. However, an e-mailed questionnaire to Robert Hannington, managing partner, RCP, did not elicit any response.
RCP has two property funds, Rutley European Property Fund, a Europe-focused fund and Rutley Russia Property Fund. Knight Frank also has an Africa-focused fund. India will be the fourth fund.
Though the company is awaiting certain approvals, it has started discussions with potential investors and is putting a management team to run the fund.
Knight Frank India Executive Director Keku Cola is expected to head the new fund and the group has also roped in Pranav Datta from Mahindra Gesco to head one of its operations, according to sources.
Though Knight Frank India is operating in the country for the last 12 years and has four offices in Mumbai, Gurgaon, Pune and Bangalore, the new fund will operate independently and have a separate team.
"A property consultant can draw a lot of synergies from launching a fund because the organisation has a deep understanding of local markets, rules and procedures, issues and relationship with developers and buyers," said a top official from a management consultancy.
Along with its US-based real estate partner Newmark Knight Frank, the Knight Frank Group's global network encompasses more than 165 offices in 36 countries across six continents.
It has over 5,300 professionals and handles some $36.1 billion worth of commercial, agricultural and residential real estate annually.
ICICI rolls out first realty MF
ICICI Prudential Mutual Fund recently launched its real estate securities fund, which is the first real estate mutual fund in India. The new fund offer is open for subscription from November 15 to December 14.
The fund will invest 51 per cent of its portfolio in high-yielding debt securities issued by real estate companies.
The scheme will not directly own or hold real estate. It will invest up to 49 per cent in the shares of companies that will benefit from the real estate sector or have substantial investments in property.
Debt securities issued by real estate companies have relatively low liquidity. Hence, in order to manage the liquidity risk, the fund has been designed as a 3-year close-ended fund.
It will invest in real estate and related sectors such as cement, construction, metals, hotels, retail, banks and finance companies.
Speaking at the launch, Nimesh Shah, managing director, ICICI Prudential AMC, said, "The Indian real estate sector is growing rapidly and is expected to register a growth rate of over 30 per cent per annum in the next five years. It is the second largest employer, next only to agriculture, and has significant linkages with several other sectors and industries."
According to National Housing Bank, India will have a shortage of over 20 million housing units and an incremental demand of 8-10 million each year.
The country will need an investment of $25 billion in the retail segment by 2010 to meet the growing demand for malls and multiplexes. The need for commercial and hospitality facilities is also huge.
Kotak global realty fund raises $200 mn
Kotak India Real Estate International Fund (KIREF) raised close to $200 million (Rs 800 crore) in its first closure recently as investors from the US, Europe and Japan put in money betting on the booming Indian realty market.
The fund, which is the second real estate fund by Kotak and first international fund dedicated to the sector, is aiming to gather a corpus of Rs 1,500 crore. It will be completed in the next two quarters from countries including Germany and Korea, according to sources.
The fund's investment strategy is to participate in the estimated $45-50 billion expansion across the real estate sector in India over four years. The fund will capitalise on attractive real estate investment opportunities across all sectors, including but not limited to commercial, residential, retail, lodging and leisure.
With this first closure, the Kotak Realty Fund arm's assests under management are now $700 million ($500 million from KIREF-1 and Kotak Indian Alternate Opportunities Fund and $200 million from KIREF International Fund).
KIREF-I, the firm's first realty focused fund, had raised Rs 450 crore, which has been fully invested in nine realty companies such as Shobha Developers, NDR Warehousing, Lemon Tree Budget Hotels, Pride Hotels among others.
Kotak India Alternate Opportunities Fund, which focuses on real estate and allied opportunities, raised an aggregate corpus of over Rs 1,600 crore ($400 million).
