Mutual fund firms Mirae, Axis plan realty foray

Illustration: Ajay Mohanty
Mutual fund companies such as Mirae Asset Global Investments and Axis Asset Management are getting into real estate funds.

Mirae is looking to float a real estate fund through the alternative investment fund (AIF) route and invest in residential properties in metros and rental assets. 

It recently hired Puneet Bhatia (pictured) as director and head of strategy, investments, and asset management. He was executive vice-president at Edelweiss Finance before joining Mirae. Mirae has assets under management of more than Rs 150 billion.

“The fundamentals of real estate in India are strong and there is an opportunity to participate in structured finance with real estate developers. Real estate continues to be a prime component of Mirae’s global strategy,” said Bhatia.

Axis Asset Management, a unit of Axis Bank, is foraying into real estate funds, too. Axis AMC has hired real estate fund management veteran Balaji Rao to head the business and is building a core team of eight to 10 people in the investment and asset management verticals.

“Over the years, we will do several AIFs. We can do structured debt, equity, commercial real estate, and invest in affordable housing in tier II cities,” Rao told Business Standard recently. 

Before joining Axis, he was managing director (MD) of Indic Capital Advisors, supervising the $630-million Sun Ares Real Estate Opportunity Fund. He also served as MD of Starwood Capital.

“Real estate is on the cusp of a turnaround. I have never done domestic funds. I believe this is the right time for domestic funds to participate in the financialisation of real estate assets,” Rao said.

Other mutual funds in the real estate business include ICICI Prudential, Birla Sunlife, and Reliance Capital Asset Management. ICICI Prudential Asset Management Company recently launched a Rs 7.50-billion fund to invest in office properties.

“With the Indian real estate sector coming out of its unorganised and opaque nature, it is an opportune time for AMCs to get into realty funds. With regulatory reforms weeding out malpractices, it seems to be a good time to venture into them. In addition, developers are in tremendous need for capital to complete their projects, which are now time-bound,” said Anuj Puri, chairman, Anarock Property Consultants.

Puri said there were distressed assets available at good valuations and realty funds could consider investing in them. “In addition, with possibility of REITs (real estate investment trusts) listing, the investment horizon looks bright,” he said. Ajay Jain, joint MD at Sun Capital Advisory, said the entry of new AMCs would not change the situation much since each such fund is Rs 5-15 billion for the next three to five years. “The requirements of the sector are much larger,” Jain said.

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