ASK Property Fund has closed its Real Estate Special Opportunities Fund IV (RESOF IV) with Rs 1,500 crore ($230 million) of investments, including co-investments. The fund will be used to invest in Indian real estate markets across Mumbai, Pune, Bangalore, NCR and Chennai. The investment is expected to have an average fund life of less than five years, with investments ranging from INR10bn to INR25bn ($146m to $365m). Amit Bhagat, managing director and CEO of ASK Property Fund said that the fund focused on high yields, similar to previous fund issues, and returns to be expected at 19-21%. Despite rumours of a decline in Indian real estate sales, Bhagat said their confidence will come from deals already in the works rather than the need to make new ones. Offshore investment houses are also looking to India for investments, particularly in the commercial, logistics and retail sectors.
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ASK Property Fund, part of ASK group which is majority owned by Blackstone, recently closed its latest fund, Real Estate Special Opportunities Fund IV (RESOF IV) with corpus of Rs 1,500 crore including co-investments from investors. Amit Bhagat. managing director and CEO of ASK Property Fund, tells Raghavendra Kamath about the fund manager’s strategy and fund raising experience in an exclusive interaction. Edited excerpts.
Was it easy or difficult to raise the fund in the current environment?
60% of our investors are repeat investors. Domestic fund raising is based on your performance and connect with investors. It is easy if your performance and connect with investors are satisfactory.
Will this fund be any different from your previous fund in terms of IRR expected, fund life, ticket size of investments and so on?
It is a high yielding debt fund similar to our previous fund. Fund life is 5.5 years but we expect average fund life to be less than 5 years. Investment ticket size is Rs 100-250 crores. We invest only in five cities namely Mumbai, Pune, NCR, Bangalore & Chennai.
What kind of returns has your last fund given to investors ?
High yield bet funds invest with targeted investment level returns of 19-21% .
Some experts say residential market may see headwinds in the next or two quarters due to higher rates, job losses and so on. What is your views on this.
The declining under-construction unsold inventory for last 8 quarters points to a sustained demand for residential segment. Global headwinds can impact temporarily.
You said you plan to deploy the corpus in current financial year. What is giving the confidence to announce that?
A very healthy pipeline and demand for growth capital gives us the confidence to be able to deploy fund quickly in this year.
How are offshore investors looking at Indian real estate in terms of taking exposure and returns?
Offshore investors are looking at India and Indian real estate due to fundamentals which are strong and project sustained growth in future. Majority of the PE are investing in commercial, logistics and retail assets. Interest in residential development is evident and it is likely to attract offshore capital soon.
Consultants say affordable housing sales are very slow due to higher rates and affordability issues. How do you look at it?
Affordable housing will also pick up with the economic growth. It is currently impacted by increase in interest rates and increase in prices due to increase in construction cost. It is also supported by government incentives and interest subsidy for first-time home buyers in the lower- and mid- income segment.