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Paracor plans to raise Rs 987 crore real estate fund

Jharna Mazumdar, Mumbai, Financial Chronicle

February 19, 2012


Paracor Capital Advisors is in the process of raising $200 million (Rs 986.99 crore) real estate fund which the company wants to deploy mainly in residential projects across the seven top cities in India.

The real estate dedicated fund is being raised from high net worth individuals (HNIs) which will be invested over a period of three to five years, said Anil Pathak, managing director and chief executive officer, Paracor Capital Advisors.

Pathak said the fund raising will be closed by around June.

“The returns available in the form equity are slightly better at the moment,” said Pathak.

Ravi Ahuja, executive director, Cushman and Wakefield, said, “Whenever the cost of debt increase developers prefer to raise funds from private equity. At present, cost of debt is at its peak. Even if we consider interest cost on debt at 15 per cent for two years it would come to minimum of 30 per cent as none of the projects are being completed within two years and for larger projects the tenure maybe more. As a result, developers, at present, prefer to give higher returns to private equity investors as they get a longer tenure.”

Further margins of real estate developers have shrunk due to higher input costs, higher cost of debt, stagnant sales among others making them desperate for cash.

Pathak further said that the company plans to exit form one of the properties it had invested in Western India. He declined to give further details on the deal.

Paracor has invested in Foster’s Beer India.

Recently, the real estate sector saw a slew of private equity fund raising. India’s Red Fort Capital raised over Rs 2,000 crore for its real estate private equity fund, aimed at tapping increasing demand for housing and commercial spaces in Asia’s third largest economy.

Peninsula Land and Brookfield AMC have announced a joint venture to launch a realty fund shortly, which will raise money from domestic investors.

Kotak Realty Fund recently raised a yield fund of Rs 523 crore entirely from domestic investors. “Given the demand potential, residential projects would be the primary focus of investment followed by commercial properties,” a Kotak Realty Fund statement said.