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The colour of money

February 5, 2008

Asmallworld.net is a private online community. An onlyfor-members closed networking portal, its creator tells visitors: “To join, you need to be invited by a trusted member. If you have no friends who are members yet, please be patient.” Obviously, the site has a long waiting list.

The only-by-invitation concept is slowly gaining currency offline too, what with several real estate companies offering flats and villas in cities like Bangalore and Gurgaon to a select clientele. And perhaps for the first time, a private equity real estate firm has launched a by-invitation-only “land banking fund” for the domestic market. Red Fort Capital Advisors has launched its first domestic fund of $250 million (roughly Rs 1,000 crore), which will look at redevelopment and affordable housing projects in key urban centres. What makes it unique? Well, it doesn’t want any or every investor. “By inviting only some interested parties, we would like to manage the quality of investors. We are looking for people who believe in the long term as against investors who are looking for a one-year exit option. The land bank approach is for long-term players only,” says Subhash Bedi, Director, Red Fort Capital Advisors.

Like so many others, Red Fort hopes to ride on the India growth story and its multiplier effect on real estate, which offers tremendous opportunity for domestic investors. The fund will focus more on land banking and land acquisition, which is the key to high investment returns in the real estate sector. The investment will be in under-valued land for residential, commercial, IT, retail and hospitality projects and the focus will be on key cities across India.

Red Fort Capital India Advisors, a part of the Cayman Island-based Red Fort Capital, has about 10 investors, including government institutions, insurance companies and pension funds. Last month, Red Fort announced a Rs 400-crore investment plan for Chennai, in residential as well as hospitality projects. It has already invested more than Rs 7,500 crore in Indian projects in 2007. The investments take the form of joint ventures, joint developments, equity, and mezzanine capital.

— Pallavi Srivastava


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