Rootcorp, a global real estate investment manager set up by Savills and the Indian business house Nichani, is actively seeking backing from UK and European institutional investors for a new fund aimed at the booming real estate sector in India.
Rootcorp, a global real estate investment manager set up by Savills and the Indian business house Nichani, is actively seeking backing from UK and European institutional investors for a new fund aimed at the booming real estate sector in India.
Rootcorp plans to develop further pooled funds as regulated investment vehicles that will invest initially in the Middle East and Indian real estate markets, and also renewable energy. Over time, the investment manager expects to have around 60% of its assets under management outside of India.
The long-term strategy includes real estate development and investment in growing, capital cities in Europe and major cities in the US.
But the first order of business is the new India Debt and Yield Opportunities fund, which will focus on the Indian market and have an IRR target return of 20%.
Rootcorp says it has the ability to deliver large real estate projects of up to 8 million square feet (743,000 m2) per annum in multiple sectors - including residential, hotel, commercial and industrial - through its shareholders and strategic alliance partners.
Rootcorp executives begun a fund raising tour in London this week to firm up existing soft commitments for the vehicle and the first close is expected by year-end or in January 2016. Institutional investors in Germany and the Netherlands are next on the list.
Massive demand and potential
A key selling point is that Indian real estate sector is expected to increase seven-fold by 2028. The urban housing shortage was estimated at around 18.8 million units in 2012. Rapid growth in service sectors such as IT and telecoms is fuelling demand for commercial space, and booming consumerism in India is seeing the organised retail sector growing by around 25 – 30% a year. A 'robust' domestic tourism industry and the growing global nature of Indian business is fuelling demand for hotels and the hospitality market.
Suresh Nichani, vice chairman of Rootcorp, said: 'The fund seeks to benefit from the enormous opportunities which abound in the Indian property sector - India requires a city the size of Chicago to be built every year to house its growing population.'
Investors
Nichani told PropertyEU that the minimum investment is $10 mln for institutional investors and $5 mln for family offices and ultra-high-net-worth individuals.
He speculated that the fund could attract up to 15 investors, and that several heavyweight pension funds and insurers in the UK and Continental Europe would be likely commit between $20 mln and $30 mln, and 'possibly significantly more' to the fund.
Nichani Group has decades of investment, financing and real estate experience, and Sobha Group, a conglomerate with a strong development arm established by Indian billionaire PNC Menon, has joined Rootcorp.
Now a director of Rootcorp, Menon said in a statement: 'Sobha delivers 7 million sq ft (650,000 m2) of property each year in India alone, and we have in excess of $14 bn of property in development in Dubai. We have the very best land buyers and construction teams in the world and now we are going to increase our activity beyond India and Dubai and use our skill and resources to enter other markets in Europe and beyond.'
Savills is supporting Rootcorp via its global network of 600 offices. Charles Weston-Baker, Savills international director, said: 'The Savills network and strength of research makes its development consultancy and sales services unique assets to any property investment vehicle and I am confident that we will be able to strongly support Rootcorp in both capital cities and emerging markets.'