Adia looks to buy India property

Mumbai/Dubai Abu Dhabi Investment Authority (Adia), one of the world's biggest sovereign wealth funds, plans to invest directly in Indian property in an effort to diversify from its current strategy of ploughing money into the country through realty or private equity funds, sources familiar with the matter said.

Adia's investments in Indian property to date total $400 million (Dh1.46 billion) to $500 million, largely through property and private equity funds, and the fund is now scouting for direct investment opportunities, one of the sources said.

The sovereign fund, whose assets range from Citigroup bonds to a stake in Britain's Gatwick airport, is close to hiring a country-dedicated fund manager from a large private equity firm to look for property opportunities in Asia's third-largest economy, the sources said.

Adia recently invested $50 million in an India-focused real estate private equity fund run by Red Fort Capital, one of the sources said. In January, Red Fort said it planned to raise $500 million for its second India-dedicated property fund, of which it had already raised $80 million.

Keen to invest

Red Fort officials could not immediately be reached for comment.

The sources did not give the name of the person Adia is hiring and spoke on condition of anonymity as the matter has not been made public yet. A spokesman for Adia in Abu Dhabi declined to comment.

Large sovereign wealth funds including Singapore's Government Investment Corp (GIC) are keen to invest in Indian property as the country's cash-strapped developers seek funds to kickstart development and reduce debt.

Debt held by Indian developers hit Rs1.8 trillion (Dh138 billion) as of September 2011, according to a report by Infrastructure Development Finance Corp.

International private equity firms, which have invested $13 billion in the Indian property sector since 2005, are expected to exit from up to $5 billion of investments over the next couple of years, according to property consultancy Jones Lang LaSalle.

This will widen the funding gap for developers at a time when home sales are low and banks are cautious about lending to the sector.

GIC has been in talks with several Indian dev-elopers, including oil-to-steel conglomerate Essar Group's real estate arm, Equinox Realty, and developer Godrej Properties, to invest in their projects.

Adia has expressed "keen interest" in investing in the country, India's Trade Ministry said in a statement in January, adding it had agreed to speed up the creation of a joint working group to facilitate the fund's investment.

Property investments constituted between five and ten per cent of Adia's overall global portfolio, according to its 2010 annual review. The property division is run by Bill Schwab, who joined the fund in 2009 from JPMorgan Chase.

North America and Eur-ope accounted for a major chunk of the Adia's investments, with 60 per cent to 85 per cent poured into those regions. Emerging markets constituted about 15 per cent.

The fund returned 7.6 per cent on an annualised basis over a 20-year period as of December 31, 2010, it said in its review.