IDFC closes first real estate fund

The Indian firm has raised $123m for its first real estate debt fund solely from domestic investors.

Indian alternative asset management firm IDFC has closed its first real estate fund, IDFC Real Estate Yield Fund, focused on debt in the Indian residential real estate market, the firm said in a statement on Thursday.

The fund raised 7.5 billion rupees ($123 million; €88.4 million) from domestic investors within ten weeks.

IDFC Real Estate Yield Fund is debt-focused with a medium term horizon and is targeting residential projects under construction in six cities: Delhi, Mumbai, Chennai, Bangalore, Hyderabad and Pune.

1.2 billion rupees has been committed to two projects in Pune and Bangalore already.

M.K. Sinha, managing partner and chief executive at IDFC Alternatives said: “This is our first real estate fund and we feel confident about its performance. The real estate sector is going through a tough phase in the backdrop of a market slowdown and most developers are stretched with reduced cash flows. This is the right time to plough money into the sector and structure transactions that will provide high yields going forward.”

Ritesh Vohra, a partner at IDFC Alternatives, added: “This fund has some key differentiators – it is a focused debt fund that targets a regular distribution of income to investors. The fund would be invested in ‘on-going' residential projects to mitigate execution related risks. It has a lower risk profile given the secured nature of underlying investments and has been designed to be an investor-friendly product.”

IDFC Alternatives has a multi-asset class platform comprising three asset classes comprised of private equity, infrastructure and real estate. The firm has four funds under management aggregating $2.2 billion assets under management, making it India’s second largest alternative asset manager.