Indian developer Sobha Group and investment manager RootCorp have launched a new fund targeting real estate assets, development debt and project equity in India.
The India Debt and Yield Opportunities Fund is aiming to raise $300m and will target an internal rate of return of 20%.
The new fund will focus on commercial, residential and leisure schemes in the major Indian hubs of New Delhi, Mumbai and Bangalore. The smaller cities of Chennai, Hyderabad, Goa, Pune and Ahmedabad will also be considered.
As well as acquiring property, the fund will also provide capital to mid-size developers who own prime land and are seeking to start projects.
RootCorp, which is based in Bangalore and partly owned by Savills, will manage the fund and will invest $5m of its own money in it. The fund will have a minimum investment of $10m for institutional investors and $5m for family offices and individuals. It will be open to investors in Europe and the Middle East.
Suresh Nichani, vice-chairman of RootCorp said: “The fund seeks to benefit from the enormous opportunities which abound in the Indian property sector. India requires a city the size of Chicago to be built every year to house its growing population.
Developer Sobha, also based in Bangalore, is currently developing 49 residential projects totalling 2.9m sq ft in India and the Middle East.
A host of Indian groups have launched property debt funds recently, including BlackSoil Realty, Essel Finance, IDFC, Indiabulls, Kotak, Piramal Enterprises and Reliance Capital Asset Management. Overseas investor sentiment towards India has improved in the last 12-18 months and property has been part of that narrative as Real Estate Capital reported in May.
At the beginning of the year, Canadian Pension Plan Investment Board launched a strategy to provide rupee debt financing to residential projects in major cities.
The India Debt and Yield Opportunities Fund, registered in Mauritius, intends to make its first commitment before the end of 2015.