3i makes foray into real estate

Europe’s biggest listed private equity firm has gone to India to commit $40m to a real estate fund.

3i, Europe’s biggest quoted private equity firm, has made its first foray into real estate by investing $40 million (€31 million) in an India-focused real estate venture capital fund.

The London-based firm, quoted on the London Stock Exchange, has made the investment in the Offshore Fund being launched by INDIAREIT.

INDIAREIT is a $160m boutique real estate venture capital fund promoted by Indian business tycoon Ajay Piramal and managed by Ramesh Jogani.

A spokesperson for 3i confirmed it was the first time the firm had invested in the real estate sector anywhere in the world. However, she said it was not possible to say what the long-term plans were for the sector. She said: “Like other sectors, we will look at high quality management teams and situations for 3i’s resources to add significant value.”

3i co-head of Asia, Mark Thornton, is taking a seat on the fund’s board as part of the investment.

The fund will target specific residential, commercial and retail sectors in southern and western parts of the country.

Indian real estate is an emerging market and has rapidly become a hotspot for investors keen to cash in on projected growth of the economy. The Indian real estate market is already a $15 billion industry and is growing at 20 percent to 30 percent per year.

3i estimates that more than $5 billion from funds is set to be invested in the country.

Chris Rowlands, 3i head of group markets, said in a statement: “The Indian real estate market is still young but very promising. INDIAREIT presents an attractive means for 3i to work with an experienced and reputable partner and gain access to the market at an early stage.”

Piramal, whose Mumbai-based Piramal Enterprises’s core businesses are in the pharmaceutical healthcare, textiles, glass packaging and engineering sectors, said:  “INDIAREIT will benefit from 3i’s proprietary systems and procedures. 3i will be able to understand and appreciate the Indian realty market.”

As well as property, private equity firms are beginning to eye investments of all types in the country, encouraged by India’s growth.

In June, Blackstone said it was setting up a fund of $500million having studied more than 100 potential deals.