Gaurav Dalmia, who has interests in the real estate business through his company Landmark, is the main sponsor and anchor investor of Fire Capital. The fund is targeting a corpus of $50 million, of which $20 million has already been committed by high net worth Indian investors.
Some leading institutions and high net worth families from West Asia and a few US and European institutional investors are also in talks with the fund. According to Dalmia, the fund will reach its proposed corpus in a couple of months.
Dalmia said most real estate developers in the country were highly undercapitalised. "Apart from a few top builders, all others could be our clients," he said.
Asked about the returns investors could expect, Dalmia said: "The real estate sector has been getting returns of 30 per cent over the last 8-10 years. That's the kind of returns we expect in the future, though it can
Fire Capital will take a strategic equity position in real estate projects all over India. The fund will invest in residential, multi-use developments, office complexes, and retail developments.
It has already identified three deals to invest in: a mixed use development in the National Capital Region {project size: Rs 290 crore (Rs 2.9 billion)}, a housing township in Bangalore {Rs 370 crore (Rs 3.7 billion)} and a housing and commercial project in Pune {Rs 180 crore (Rs 1.8 billion)}.
The fund will invest in about ten projects.
Fire Capital is being managed by Om Chaudhry, who was earlier a partner at Feedback Ventures.
"Worldwide, real estate represents a high share of overall investments. Real estate returns are superior to stocks and bonds on a risk-adjusted basis and performance has virtually no correlation with stocks and bonds, thereby offering substantial diversification benefits. Over the last few years, India has become one of the more attractive economies for investors around the world," a release issued by the fund said.