Financial Daily from THE HINDU group of publications
Friday, Nov 05, 2004
Foreign Institutional Investors
Industry & Economy - Real Estate & Construction
CalPERS eyeing investments in real estate in India
Mumbai , Nov. 4
AFTER dipping a toe in the Indian securities market, CalPERS is now looking for opportunities for investment in Indian real estate. Globally, real estate investment is about 10 per cent of the pension fund's corpus.
"We are looking at various opportunities right now. Once our due diligence requirements are met, we would be making our first real estate investment in India," Ms Priya Mathur, Board Member, CalPERS, told Business Line.
To begin with, CalPERS is looking at investing in commercial real estate in urban centres. The continuous migration of population to urban areas is leading to development of attractive opportunities in housing and commercial real estate projects. "This makes it very attractive for us," said Ms Mathur.
Ms Mathur says that though CalPERS does not want to be the most significant player in the equity market, it is looking at opportunities to augment its investments in private equity and real estate.
If there is any strong and vibrant real estate investment trusts in India, we would be open to considering investments in these as well, she added.
Though foreign institutional investment in real estate in India cannot be made directly, FIIs can invest in funds that service real estate projects.
The California Public Employees' Retirement System (CalPERS) has invested over $100 million in the Indian equities market over the last few months. The fund has also made an investment of $5 million-$10 million in private equity in India. CalPERS has no specific allocation of funds to the Indian market for any class of investments, but with a total corpus of $170 billion, it is one of the largest investors in the world.
In the private equity space, currently, venture capital funding is largely restricted to information technology and biotechnology sectors. While Ms Mathur concedes that these look to be the strongest markets for venture capital funding, CalPERS would be looking at other sectors as well. "We invest in funds that have expertise in various sectors and markets. We would look at the funds that we invest in, to identify specific opportunities and develop strategies, do the necessary due diligence etc," Ms Mathur said.
CalPERS' decision to invest in India is expected to show the way for other public pension funds to look at India as an investment destination. "I chaired a conference in summer that had a lot of the big public pension funds in attendance. It was the first time that many of these funds learned about India and there was a lot of excitement about possibilities in India," she added.
It is understood that the Missouri State Pension fund has also begun its Indian investments.
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