NRI group plans $1 bn realty binge

Trikona, a global private equity firm, taps funds in the US and UK to invest in India.

NEW YORK: Aashish Kalra, co-founder and managing director of Trikona Capital Group, a global private equity firm started by two India-born entrepreneurs, has big plans for the already-on-fire Indian realty market. Speaking over the weekend, Kalra said that his global investment firm would plough a billion dollars in equity into India's real estate sector through two funds launched in the US and UK.

Trikona, which has offices in New York and London, just raised £250 million (approximately $450 million) through a public offering of its Trinity Capital Fund (TRC), which listed on April 21 on the London Stock Exchange.

"Trinity Capital is the first of our funds, which will invest primarily in commercial development sites in India. We will build offices for Global 2000 corporations, mid-market hotels and malls," 34-year-old Kalra, (pictured) who will be driving the fund out of New Delhi with offices in Mumbai and Bangalore, told DNA Money.

"On the other hand, our private equity fund, which has raised money from institutional investors, will be focused on residential development. This fund will be very similar in size to our London fund Trinity plc.," he added.

"As we have been working on finding the right partners and projects in India over the last two years, we will be deploying significant amounts of money over the next 18 months. You should see the first transaction in the next 90 days."

Trikona's real estate projects in India target a 25 % return on investments. Typically, the investments will be structured as outright ownerships, joint ventures, or equity investments with a target size of $10 to $100 million per transaction. The global fund is likely to bankroll a hotel chain's expansion plan to construct over two dozen mid-market hotels in India over the next five years.

The Indian real estate market has been expanding at the frenetic rate of 30 % a year and is now on the radar screen of private equity firms like Lehman Brothers, Wachovia and GIC Singapore. According to experts, the market is tipped to touch the $100 billion mark by 2015. The building boom reflects the high-octane growth of the economy and has fuelled demand for modern offices, hotels, middle-income apartments and luxury mansions.

According to the numbers, residential real estate has been off the charts for several years. Sales were white-hot in 2005, with prices climbing in places where they already were high. Not surprisingly, the satellite cities of Gurgaon, Noida, Thane and Pune will attract a lion's share of Trikona's funds.  

"We are not focused on mill lands in Mumbai or the land auctions in Delhi but we will capitalise on growth using the sprawling suburban model. We also want to be in cities like Ludhiana, Indore, Jaipur and Mysore, which need to grow. There are 38 cities with over a million people that have not seen a new township project for years," said Kalra.

"We are committed to creating a portfolio of $5-10 billion in assets in India over the next five years, which will help form the foundation of India's real estate capital markets," he added. US-educated Kalra, who is also an alumnus of St. Stephen's College, started Trikona with Doon School friend Rakshitt Chugh, 37, who brings his real estate capital markets experience with US investment firm Lehman Brothers to the table. "The opportunity is where the growth is so it was natural for us to look at India despite living in the US for over a decade," said Kalra.

"Raising money has been fairly simple — I wouldn't say it was a walk in the park. Once people are comfortable with your investment thesis and ability to execute, they endorse it," said Kalra, who has traded his life in the US technology sector for a high-risk, high-reward experience in India's real estate market.