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 Buoyant Indian economy and

robust demand for real estate
assets
 Exceedingly sharp demand
supply gap e.g. existing housing
shortage of more than 20 mill
homes
 An ³NRI/PIO/HNI´centric Real
Estate Venture Fund for India could
take on all sizes and types of
projects without any FDI or Local
Regulatory issues.
 Business Model is Development
of real estate in key cities. Further
leveraging possible with Bank funds
if needed.
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First close USD 25 Mio??
 

 Minimum Investment size

USD 250,000 or INR 10 mio ??

 Target ROI 25% Gross

 Tenure 5 years from date of

last drawdown
 Returns from 3rd year
onwards??

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10th most industrialized country
4th largest economy ±
purchasing power parity
GDP at current prices Rs. 25.169
billion (US$ 547 billion) (2003-
2004) (US$ 1 = 45)
Foreign exchanges reserves :
US$130 billion
Well-developed banking system
and vibrant capital market
2nd most populous country in
world
Population 1027 million as per
2001 census

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 ›onducive policies for foreign investment
˜ Freedom of entry and investment location
˜ Freedom to use technology and production
˜ Repatriation of capital, dividend, interest etc.
permitted
 Increased urbanization
˜ Urban population 27.80 % [2001 census] up
from 25.70 % [1991 census]
˜ Increase in housing requirements
 Increased economic activities ±Business Process Outsourcing,
retail boom, increasing share of service sector
˜ Increase in commercial property requirements
«These will drive real estate development in
India

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 Increasing transparency in real

estate transactions
˜ rating of projects by rating
agency commenced
 Falling interest rates ±impetus to
increased home loans disbursements
 Increase in total Home loan
disbursements by Banks and Housing
Finance ›ompanies (HF›s) -76%
between 2001-02 to 2002-03
X
 



 
Ease of Finance for property
development

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  X
˜ Any person currently
holding a foreign
passport (not Pakistan
or Bangladesh),who can
prove his Indian origin
up to three generations
before (i.e. either the
person himself or his
father or grandfather or
great grandfather must
have been a citizen and
resident of India), or
the spouse of such a
person is eligible for a
PIO card.

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 NRI/PIO investments have no
 100% FDI allowed for
restrictions (except PIO¶s cannot
development of townships,
invest in farmland or agricultural
including housing:
property) and are fully repatriable
˜ Minimum 100 acres or 2000
 O›B investment treated as Foreign
units (under certain conditions)
investment NRI/PIO¶s need to invest
˜ ›ore business of the foreign in their own names
investor should be integrated
 FDI not permitted (except NRI/PIO
township development with a
investment) in shopping malls, office
successful record
complexes and in residential
˜ Minimum capitalization developments/townships < 100acres
should be US$10 million for a
 Real Estate Investment Trusts
wholly owned subsidiary and
(REIT¶s) not permitted
US$5 million for joint ventures
with Indian partner  100% FDI permitted in hotels,
industrial parks & software technology
parks ±no restrictions

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 Real Estate Venture Funds are
permitted ±a recent development
˜ No additional incidence of tax if `


approved as a V› fund
˜ No restriction on repatriability of funds
`

˜ No restriction on uplifting income to the  

investors
˜ Must be registered with SEBI
˜ ›annot invest in listed companies
˜ Must obtain RBI approval at investment
acceptance stage and investment
repatriation stage (formality)
˜ FDI norms of Government of India
would apply
˜ Maximum of 66% of corpus allowed to
be invested in equity and maximum of
33% in debt
˜ Maximum of 25% of corpus in any one
project
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Housing Shortage >22 Mio Homes
Likely to increase to over 250 Mi
Units in next 10 years
The National Housing Policy 1998
envisages a shift in the Government¶s
role from a Builder to an Enabler
Government is committed to
removing barriers to
˜ Access to land
˜ Finance and technology
˜ Public-private partnerships to
accelerate pace of house construction
The Government has set a target of
D
 

  250,000 rural housing units per year

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 The government has stressed on rural

  housing sector & raised allocation for
Indira Awas Yojana by USD 120 million to
USD 500 million; targets addition of
250,000 houses per year
 Reserve Bank of India (RBI) will revise
the norms of repayment of rural housing
loans by banks ± installments can coincide
with crop cycles
 Tax exemption on interest on housing
loans at Rs 150,000 per year
 The National Housing Bank
(Amendment) Act, 2000 ± speedier
method of recovery of dues from the
defaulting borrowers through recovery
officers
 Reduction in risk weight for Housing
Finance ›ompanies (HF›¶s) to 50% from
100%
 Increased HFݦs exposure to housing
sector due to higher quantum of capital
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 USD 2Bn Investments in Malls
and Multiplexes in 5 years
 Catalysts
˜ Shift in urban demography
˜ Favorable tax regime for
multiplexes
 IT/ITES to generate
infrastructure investment of USD
0.5bn over 5 years
˜ Mumbai, Delhi, Bangalore,
Chennai, Pune and Hyderabad to
witness investments

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Multiplex screens planned in various states

States No. of Screens
Maharashtra 150-200
Gujarat 50
Delhi 50
Uttar Pradesh 100-150
Rest of India 550-650
D
 D


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˜ ëpprox. 20 Million sqft in
`

2004 driven by the IT/ITES
sector growth

 ˜ Expected to continue growth
at this minimum level for the
next 3-4 years.
˜ ëll India first quarter space
take up in tier I cities
(including Pune) was approx.
6.4 Million sqft
D


˜ New supply over the next 18
months in the range of 18 -20
Million sq ft driven by the
IT/ITES sector

›


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ëpprox. 100 Million sq ft of
demand expected over the next
5 year period
Strong demand for developed
industrial plots and undeveloped
industrial land in major cities.
˜ Environmental concerns e.g.
Shift of industry dictated by:
shift of industrial units out of
˜ Sales tax/excise/income tax Delhi as per Supreme Court
concessions in developing areas directive
e.g. Uttranchal and Kutch district
˜ Cost concerns e.g. relocation of
of Gujarat
industries out of centre of
˜ Locational advantages in areas Mumbai & freeing up of mill lands
close to major airports/ports e.g.
˜ ëvailability of infrastructure
Gurgaon
such as skilled labour& power
˜ Proximity to customers and/or
vendors
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 Exclusive Investment by
NRI¶s/PIO¶s and HNWI¶s
 No investment solicited into
the scheme from foreign
companies & non-Indian
investors to ensure total
flexibility in taking on all sorts
of projects without restriction
Set up as a scheme under
PëRIJëT CONSULTING (a
venture capital fund)
incorporated as a Trust in
India and registered with SEBI

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Units to be subscribed by
investors on a private placement
basis
˜ Minimum investment per
investor is INR 10 mill (USD
250K)
˜ 25% payable on application and
balance over maximum of 12
months
Who can invest?
˜ Non Resident Indians/ Persons
of Indian Origin
˜ Indian residents
˜ Indian corporates

Target Fund size ± INR 2200

mill (USD 50 mill)

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 Minimum aggregate
commitment for first
close j between INR 675
mill (USD 15 mill) and
INR 900 mill (USD 20
mill) j All commitments
will be void if minimum
amount not achieved ˜ 20% of Gains as Performance
 Duration ± 5 years Fee based on hurdle rate of 10%
from date of last as follows:
drawdown ˜ nil if gains are < 10% p.a.
›osts ˜ 20% if gains are >= 10%p.a.
˜ ixed Management fee ˜ ›osts of due diligence, tax,
of 2% p.a. of committed accounting and legal charges to
capital be incurred in the course of
business
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˜ SEBI approved V› fund j pass through
entity with tax free statusj no additional
tax burden on investors
˜ Interest/ capital gains are taxable in the
hands of the investors at time of
distribution
˜ Dividends taxable at the project level
and there is no tax liability on the investor
˜ Long-term capital gains on transfer of
units applicabley but may be exempted if
gains are invested in certain specified
securities/ assets for a specified period of
time
˜ No liability to Wealth-tax or Gift Tax on
investors
Investor Profile
˜ Non-Resident Indians (NRI¶s)
˜ Persons of Indian Origin (PIO¶s)
˜ High Net Worth Indian Nationals (HNI¶s)
˜ ›orporate Houses from India
˜ Financial Institution from India
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 Focus on the major cities
Will partner reputable Indian —


developers in new or existing
development projects
Will nurture and develop contacts
and alliances with key players in the
industry
Will look for innovative and ³out of
the box´ development ideas
including:
˜ ëcquisition of land held by sick
companies and by financial
institutions
˜ Providing development expertise
and capital on leaseback deals
Sector priorities
˜ Residential & residential townships

˜ Commercial projects including

IT/ITES
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 Limit exposure per project to a
maximum of 25% of total fund size
If additional equity capital is required
on a project ± first offer to investors
before others significant co-investment
opportunity
Use of debt to leverage capital
thereby enhancing overall equity
returns target effective 1:1 debt/equity
ratio
 —
 

˜ ëllows complete flexibility in taking on
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 all types and sizes of underlying
projects
˜Exploits a window of opportunity for
NRI/PIO/HNI¶s.
˜Real opportunities for co-investment
with the fund in booming India Real
Estate Sector

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