Asset Firm Launches $250-Mn Fund for Investment in India

Dubai: An Indian asset management firm has launched a $250-million realty fund for Gulf investors to develop mid-income residential properties in India.

ArthVeda Fund Management's Star Fund II is the first realty fund to be offered in the Gulf and other overseas markets, following the recent amendments to India's FDI (foreign direct investment) policy.

"The mid-income residential segment in India is considered to be the sweet spot offering lower risks and high returns in a relatively short fund life. Thanks to huge demand and absorption of mid-income property across India, investments in this segment have low cyclicity and low average investment ticket size that makes growth-oriented investment opportunity for global investors," ArthVeda CEO Bikram Sen said.

The fund has projected an internal rate of return of 18-21 per cent in dollar terms with maximum fund tenure of 60 months.

The fund targeted at institutions, large corporate houses, sovereign wealth funds, family houses and high net worth individuals (HNI) in the GCC and other foreign markets has a minimum investment size of $500,000.

"Our investment strategy is well researched and has been proven a success as our earlier domestic funds have given high returns. We believe that the key to realising best returns in real estate is to invest in a market segment with high demand such as mid-income housing with small, quick turn-around projects," Mr Sen said, adding that the group collectively lends $350 million across India every month.

STAR Fund II will make 35-40 investment across 11 cities in India including Mumbai, Bangalore, Chennai, Ahmedabad, Kolkata, Coimbatore and Jaipur.