Sunday, June 15, 2008

Promoters and Builders Association of Pune launches Realty Fund to enable smaller developers to access equity funds

The first series of the PBAP Realty Investment Fund has a total corpus of Rs 25 crores and has been fully subscribed by around 50 of the PBAP members.

A)Funding:

1) First priority to the contributors to the fund

2) followed by other members of the PBAP

3) lastly to projects of non-PBAP members.

B) The investment committee of the fund, which comprises industry stalwarts, will assess the financial feasibility of projects under consideration.

C) The fund would invest up to Rs 5 crore per residential project in Pune to help the small developers to complete their projects quickly and raise standards.

D) PBAP Realty Investment Fund has a lock-in period of seven years. However, investors can transfer their stake to another PBAP member.

E) Aim to disburse funds within one month of the application.

F) Investment in projects that have time line of 18-24 months.

F) Once the project is ready, the investments will be diverted to some other project.

G) Returns will be shared by the investors.

Speaking at a press conference, Lalit Kumar Jain, President, PBAP said, "No one currently offers equity funding to smaller developers. Foreign and domestic equity funds look at large projects or projects with a scale of five lakh sq feet. We will look at providing equity to projects that small, from half an acre to two acres.

Ranjit Naiknavare , a PBAP member and managing director said, "The investment would be done in land cost as funding is easily available from banks for construction activities. The second and third series of this fund would be launched later."

PBAP has formed a Trust, which will have a separate company to run the fund activities. PBAP expects the fund to grow to Rs 300 crore by 2009 and to Rs 4,000 crore in another three years. "After Pune, we will cover Maharashtra and later spread to western India," Naiknavare added.

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