Key Takeaways
- • ICICI Prudential AMC is targeting a 20 percent internal rate of return (IRR) on its Rs 2,000-crore real estate fund, according to Rohit Rathi, principal, real estate, ICICI Prudential AMC, speaking to Moneycontrol.
- • The ICICI Prudential Real Estate Development Fund has raised close to Rs 1,000 crore from high-net-worth individuals, family offices, insurance companies and corporate treasuries, with a green-shoe option for another Rs 1,000 crore.
- • The fund's first investment is Rs 210 crore in a Raymond Realty project in Mahim, structured through preference shares so returns are linked to project profits rather than a fixed interest payment.
- • The strategy targets mid-segment redevelopment projects by large, branded developers in established Mumbai neighbourhoods, with completion timelines of three to five years.
- • Management stresses the 20 percent IRR is an underwriting objective, not a promised return, and actual performance will depend on underlying project profitability.
Summary
ICICI Prudential Asset Management Company is targeting a 20 percent internal rate of return on its Rs 2,000-crore real estate fund, with an investment strategy centred on redevelopment projects in Mumbai neighbourhoods and partnerships with large, branded developers. Speaking to Moneycontrol, Rohit Rathi, principal, real estate at ICICI Prudential AMC, said the ICICI Prudential Real Estate Development Fund has already raised close to Rs 1,000 crore from high-net-worth individuals, family offices, insurance companies and corporate treasuries. The fund retains a green-shoe option to accept another Rs 1,000 crore.
The fund has made its first investment in a Raymond Realty project in Mahim, committing Rs 210 crore through preference shares. The arrangement links the fund's returns to the profits generated by the project rather than a fixed interest payment. The project is a premium mid-segment development with homes priced between Rs 4 crore and Rs 8 crore, and its connectivity to the Bandra-Kurla Complex, Tulsi Pipe Road and the Bandra-Worli Sea Link is positioned to attract buyers seeking a lower price point than South Mumbai and Bandra (West).
Rathi said the fund prioritises developer quality and location over project size, favouring partners with a record of on-time delivery and strong brands. It is targeting established neighbourhoods such as Andheri, Bandra, Carter Road, Pali Hill, Mahim and Malabar Hill, where social infrastructure is in place and demand for well-built housing exists. He cited a project of around one lakh square feet in Pali Hill that could carry a gross development value of about Rs 1,000 crore. The fund will focus on mid-segment projects completing within three to five years rather than seven- or eight-year cycles, which Rathi said offers homebuyers greater visibility and allows a more predictable assessment of investment outcomes.
Rathi noted that real estate is cyclical and that premiumisation and branded residences are currently in focus. He also advised investors to allocate across asset classes based on risk profiles and overall wealth rather than attempting to time which asset class will outperform. The fund's managers emphasised that the targeted IRR is an underwriting objective, not a promised return, and that actual performance will depend on the underlying projects and their profitability.
The fund has made its first investment in a Raymond Realty project in Mahim, committing Rs 210 crore through preference shares. The arrangement links the fund's returns to the profits generated by the project rather than a fixed interest payment. The project is a premium mid-segment development with homes priced between Rs 4 crore and Rs 8 crore, and its connectivity to the Bandra-Kurla Complex, Tulsi Pipe Road and the Bandra-Worli Sea Link is positioned to attract buyers seeking a lower price point than South Mumbai and Bandra (West).
Rathi said the fund prioritises developer quality and location over project size, favouring partners with a record of on-time delivery and strong brands. It is targeting established neighbourhoods such as Andheri, Bandra, Carter Road, Pali Hill, Mahim and Malabar Hill, where social infrastructure is in place and demand for well-built housing exists. He cited a project of around one lakh square feet in Pali Hill that could carry a gross development value of about Rs 1,000 crore. The fund will focus on mid-segment projects completing within three to five years rather than seven- or eight-year cycles, which Rathi said offers homebuyers greater visibility and allows a more predictable assessment of investment outcomes.
Rathi noted that real estate is cyclical and that premiumisation and branded residences are currently in focus. He also advised investors to allocate across asset classes based on risk profiles and overall wealth rather than attempting to time which asset class will outperform. The fund's managers emphasised that the targeted IRR is an underwriting objective, not a promised return, and that actual performance will depend on the underlying projects and their profitability.
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