HSBC plans $ 600-m Indian realty fund

London-headquartered financial services major HSBC is set to be the first foreign financial institution to raise an India-focused real estate fund. The banking major is planning to raise $500-600 million for the realty fund, with fund-raising likely to begin in the next few weeks, sources close to the development said.

“The bank is keen on getting a slice of the real estate market in India. However, the mandate of the realty fund would be such that a small portion of the corpus would also be invested in other sectors,” said an industry source.

An e-mail sent to HSBC Global Investment Banking director and co-head Ravi Menon did not elicit a response.

The proposed fund would be the first India-focused fund for HSBC. It has been making private equity investments in India through HSBC Private Equity (Asia) Ltd.

With real estate becoming a buzzword for investors, several companies have set up realty funds to cash in on the boom in the market. HDFC, Kotak Realty and IL&FS have set up real estate funds where international investors have put money to invest in opportunities in the India realty market. While HDFC raised a $750-million international fund in September last year, IL&FS Investment Managers raised a $502.57-million fund in May 2006. Kotak Realty recently concluded its second fund with a corpus of $400 million.

Some of the other global financial institutions looking to invest in Indian realty include — Goldman Sachs, Morgan Stanley, Lehman Brothers and Merrill Lynch. However, these financial institutions are looking to make investments through their global funds.

Via Economic Times