“The sovereign wealth fund has formed a strategic alliance with Hines to invest across the residential segment in metros across India. This is the first direct real estate venture with a developer in India for the fund,” said one of the people with direct knowledge of the investment. It’s not known how much equity it will have in the venture.
Abu Dhabi Investment Authority declined to comment. “ADIA has a policy of not commenting on market rumours about specific investments etc,” spokesperson Erik Portanger said in response to questions emailed by ET.
Yash Gupta, managing director and Hines India country head, also declined to comment.
The sovereign wealth fund owned by the emirate of Abu Dhabi recently invested $300 million (Rs 1,800 crore) in the offshore fund of Kotak Realty Funds run by Kotak Mahindra Bank. The money will be used to invest on behalf of the sovereign fund in the Indian real estate sector. The cash-rich sovereign wealth fund has so far invested more than $500 million in India, largely through realty or private equity funds.
“Abu Dhabi has been scouting for opportunities to invest directly in the Indian real estate sector. It is now backing Hines to foray into the residential market and is targeting mid-market and upper mid-market residential development,” said the person cited above. The company will first enter Mumbai and then the Delhi-National Capital Region.
The Abu Dhabi fund has also appointed Aditya Bhargava to look at investment options in India. Bhargava earlier served as managing director at SITQ India.
The move by the Abu Dhabi fund follows increased overseas investment in the sector. Qatar Investment Authority recently invested $300 million or Rs 1,800 crore in Bangalore-based real estate developer RMZ Corp to acquire commercial space in Bangalore, Hyderabad, Chennai and Pune.
Canada Pension Plan Investment Board has committed $200 million for an 80% stake in a joint venture company. The partners will jointly acquire foreign direct investment compliant office buildings in India’s biggest cities.
“Deal momentum in the real estate sector is expected to increase in the coming year,” said Sanjay Dutt, executive managing director for South Asia at realty consultant Cushman & Wakefield.
These deals are taking place in the backdrop of the Securities and Exchange Board of India’s moves on introducing Real Estate Investment Trusts, he said.