MIPIM 2008: South African firm announces India RE fund

Old Mutual Investment Group is showcasing a new $500 million Indian real estate fund at the world’s largest property conference in the south of France this week.

Old Mutual Investment Group, a South African investment firm managing $4.5 billion in assets, has announced the launch of a $500 million (€326 million) Indian real estate fund.

Showcasing the vehicle at this year’s MIPIM conference in Cannes, the firm revealed it will hold a final close on the Triangle Real Estate India Fund at the end of the month.

The vehicle, which is a joint venture with ICS Realty of India, has secured an investment pipeline of projects worth more than $400 million, according to Colin Young, head of institutional property investments at Old Mutual Investment Group Property Investments. It is initially looking to capitalize on the rapidly expanding retail market in India.

“Organized retail is wholly under-represented in India,” said Young. “Retail is dominated by small operators, mainly owner-operated kiosks. Currently, organized retail accounts for less than four percent of the $400 billion market. The organized sector is expected to grow to 12 percent by 2010 as consumer preferences increasingly shift to modern retail formats in a growing, urbanizing population, half of which is under 25.”

Young said that while the Triangle Real Estate India Fund would be weighted to retail, it would be eyeing the commercial sector that is being driven by information technology and IT-enabled services.

Old Mutual Properties manages 68 malls worldwide with more than 4,500 tenants, and has projects in Africa, Eastern Europe and Asia.

The firm first entered the Indian property market five years ago with a property services joint venture, Pioneer Property Zone, in partnership with ICS Realty. Anil Dhanjee, manager of the Triangle India Fund, said a significant part of the initial $400 million pipeline value is for a more than 25 percent equity investment in four projects, one of which is already under construction. Those projects are planned to cover 16 million square feet. The project under construction, covering 1.2 million square feet, is in Aurangabad in Maharashtra state. More than three-quarters of the retail area has already been leased to leading brands, said Dhanjee. The other three projects are all mixed use developments, including retail, hospitality and commercial components.

LPs for the fund include institutions and high-net worth individuals from Europe, Asia and South Africa. The fund has an eight-year term, with an option to extend by two years. 

Organized retail in India has been attracting a great deal of investor attention. Singapore’s CapitaLand has formed a joint venture with the Kshitij Venture Capital fund and Pantaloon Retail to set up 50 malls in the country. The UK’s Liberty International has formed a joint venture with Prozone, the real estate arm of retailer Provogue, to build 12 malls in secondary Indian cities.