Domestic real estate-specific private equity funds have started raising money after a hiatus as developers are finding it difficult to tap the capital markets through initial public offerings.

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Indiareit, a real estate private equity fund promoted by Ajay Piramal group, is raising Rs 700 crore in the domestic market. The fund is looking at projects in major cities such as Mumbai, Bangalore and Pune and the investments would be made in other developers’ projects and not in the company’s real estate firm.

Ramesh Jogani, managing director and CEO, Indiareit, said, “The fund will be subscribed by June and its duration is 7 years.”

Jogani plans to invest 30% from this new fund in projects this year itself, with 20% in the initial-stage projects and 10% in the later-stage projects. The fund is targeting an internal rate of return of 25%.

ASK group, which closed its first real estate fund in January, is planning to raise money through an offshore fund.

Sunil Rohakale, executive director, ASK group, said, “We are looking at an offshore fund of $150-200 million in the second half of this financial year. We will raise this money once we do a drawdown of 50% from our domestic fund.” The group plans to raise the money from the US, Gulf and European countries.

KG Krishnamurthy, managing director and CEO, HDFC Property Fund, said, “A new fund from our stable can happen in 2011.” He did not give any specific amount which the HDFC fund would raise. Krishnamurthy said the land values are still high. This fund is also eyeing projects in the tier-I metro cities.

Managing director of an international fund, who did not wish to be named, said, “Though we all are looking at raising money for new deployments we expect action to be more in next three-four months as developers who have filed for listing are finding it difficult to move ahead with their plans. They are eagerly looking at pre-placements. After a few months they will come heavily knocking at private equity funds’ doors.” 

Saffron Asset Advisors, manager of Yatra Capital Fund and Saffron’s India specific realty fund, recently raised close to $150 million for investing in the Indian real estate.