Fire Capital, recognized as the inaugural private equity fund concentrating on the Indian real estate sector, has set its sights on raising $100 million dedicated to investments in housing initiatives. This funding drive primarily targets existing investors located in the United States, with a specific focus on tier-II and tier-III cities spanning states such as Haryana, Punjab, and Rajasthan, as articulated by CEO Om Chaudhry.
"There is an intense scarcity of residential projects, as India would require at least another 30 million homes by 2012 to fulfil the existing housing need. We want to cut some bit of the demand and supply gap in small towns and accommodate to the middle income segment," he explained. A significant portion of the necessary homes is directed towards the mid and lower income segments. Founded in 2004, Fire Capital successfully raised its inaugural fund, amounting to $121 million in 2006, which possesses the capability to invest approximately $250 million through co-investment commitments made by its investor network. The initial funds are nearing depletion, prompting the firm to seek additional financing aimed at developing between 25 to 50 acres with each builder in smaller towns during the current financial year.
The country's real estate landscape was significantly impacted by the global economic downturn during 2008-09, leading to reduced buyer activity and increased caution among banks regarding loan approvals. While recovery within the sector is now gaining pace, the accumulated debt remains a critical issue. Industry assessments indicate that real estate firms currently hold a whopping total debt of around 75,000 crore. In response, property developers are increasingly turning to private equity firms not only to advance both ongoing and upcoming projects but also to address a portion of their outstanding debts.