News: EurIndia plans to raise Rs 100 cr for real estate

(BL 29/09/2006) Mumbai - EurIndia, an early stage venture capital fund that recently raised a Rs 100-crore fund out of Mauritius to invest in the Indian real estate sector, plans to raise a similar fund later this year.

Vinod Ganjoor, key founder and CEO of EurIndia Ltd, told Business Line that this time round the company proposes to raise funds for a real estate multi-sector fund.

"We are looking at residential, commercial, hospitality, retail, etc. While we are looking to maintain a pan-Indian presence, our main focus would be Goa and the South."

The fund, which is well known for having invested in startups such as Allsec Technologies, Thinksoft Global and OnMobile, is in exit mode. It plans to exit from these companies over the next 12-18 months.

Typically, an early stage venture capital fund would invest in development stage projects in the residential, commercial/IT/BPO, and hospitality spaces and exit through sale of the units or IPO (say, in the case of a hotel or hotel operator).

"Allsec Technologies is our leading portfolio company and with Carlyle coming in, we are looking at landmark returns for a startup deal," Ganjoor said.

"We have stayed invested in this company since 2002 and are now looking to making 10x returns. With regard to OnMobile, at current valuations established on conclusion of pre-IPO private equity deal, we have established a valuation of over 5x returns. Over time we are targeting 12-15x returns. In Thinksoft we are looking at almost 6-7 times returns on our investment."

EurIndia's recent real estate fund has identified two projects for investment.

"One is a large hotel project in Goa where we have acquired land and are close to identifying a hotel operator to manage the hotel. This will be a Rs 150-crore project over time and we expect to close the deal with a hotel chain by November and start construction some time next year. About 38 crore has been invested so far in this project."

The fund is also close to finalising a multi-city hotel project with a reputed partner in Chennai.

"We will construct and operate 8-10 business hotels in the 3- and 4-star segment in southern India. The project will absorb over Rs 200 crore of equity capital and we will contribute half of that - so, about Rs 100 crore, over the next three years," Ganjoor said.

He added: "We will initially commit approximately Rs 20 crore seed capital to the second (3/4-star hotel) project by November when the deal closes. Another Rs 15 crore has been earmarked for deals that we hope to close before December. The rest will be deployed by June next year."

EurIndia is a Gibraltar-based fund while its hospitality fund is via the Mauritius-based Elliot Resorts. EurIndia owns 17.18 per cent of Allsec Technologies (before Carlyle) through its company, Euronet, and 31.2 per cent of Thinksoft Global through a company called Euro-Indo Investments Ltd.