Our investment focus continues to remain on Mumbai, Chennai, Bangalore and the National Capital Region (NCR). We want to go slow. KHUSHRU JIJINA, MANAGING DIRECTOR, INDIAREIT FUND ADVISORS

Indiareit Fund Advisors, the real estate-focused private equity arm of Piramal Enterprises, had brought in group loyalist Khushru Jijina as Managing Director in December 2012. The fund, with a total of Rs 5,319-crore (including own funds and third party mandates) assets under management, also forayed into self development projects.

In an interview with Business Line, Jijina said there has been a change in strategies such as to have small-sized funds, rigorous monitoring and concentrate on exits.

Edited excerpts:

The year 2013 has been a difficult one for the real estate sector? How did it pan out for Indiareit?

Last year has been a particularly good year for us because we were one of the few funds who did all three things — raising money, investing and exiting.

However, it had been a difficult year for the sector. We look at it as an opportunity as the sector requires money when it is in a bad state. Secondly, PE funds in real estate have also dried up.

You had forayed into self-development with a project in Bangalore. Are you planning to take this model forward?

Yes, we are going to build on it. This is not about developer margins, but about being closer to ground realities.

We are concentrating on the southern market as we wouldn’t want to deploy more than Rs 100 crore in self-development projects. Doing these kinds of projects in Mumbai would require investments of Rs 300-400 crore a project. We are also looking at entering Chennai for self-development as soon as we get a good deal.

On the investment front, which are the cities you intend to focus on?

Our investment focus continues to remain on Mumbai, Chennai, Bangalore and the National Capital Region (NCR). We want to go slow. Real estate development is a local game and we need to build our strength. As a fund, my ambition is to give superior returns to investors and not increase land under development.

What is the size of your offshore fund?

The size was $500 million earlier, but when I took over we slashed it to $300-350 million. Now, keeping in mind the deployment pipeline and target investor profile, we are looking at raising $250 million.

Your policy now is to raise small-sized funds but then you raised this Domestic Fund V of Rs 1,000 crore?

My first fund was Rs 430 crore. In one of these recent investor meetings, we cleared two proposals of Rs 430 crore each. So, two investments of today are equal to my fund one size. In the seven years, obviously my deal size has also increased. So, Rs 1,000 crore also, would not be more than seven to eight deals. In today’s context, Rs 1,000 crore is comfortable for me.

How long would you continue to stay invested?

Basically, we see an average period of about four years. Next year, my strategy would be to start looking at exits from Fund IV as it will be hitting the fourth year. You would see the exits by the middle of next year.

It (exit) requires rigour. I believe anybody can invest but it’s the exits that differentiate the men from the boys.

rajesh.kurup@thehindu.co.in

manisha.jha@thehindu.co.in

(This article was published on January 13, 2014)
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