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ICICI Prudential Asset Management Co is raising a Rs 2,000 crore residential development fund.
The fund is focused on Mumbai. The move comes as the housing market in India's financial capital sees sustained absorption. Redevelopment is emerging as a key source of new supply in established locations.
Fund structure: six-year tenure, 20-25% target IRR
The fund size includes a green-shoe option of Rs 1,000 crore. It has a tenure of six years. The fund is structured as a close-ended Category II Alternative Investment Fund (AIF).
It is targeting a gross internal rate of return of around 20-25 per cent.
- Base fund size: Rs 2,000 crore
- Green-shoe option: Rs 1,000 crore
- Tenure: six years
- Structure: close-ended Category II AIF
- Target gross IRR: 20-25 per cent
Redevelopment identified as the primary strategy
The ICICI Prudential Residential Development Fund will focus primarily on residential projects in the Mumbai Metropolitan Region (MMR).
It will target prime micro-markets. In these areas, land availability for greenfield development is constrained.
The investment strategy identifies redevelopment of existing housing societies as the primary route in several key locations.
Rohit Rathi, Principal, Real Estate Business at ICICI Prudential AMC, said the Mumbai property market continues to see strong demand for projects by established developers.
He said the fund is looking at development and redevelopment opportunities in the city. He added that the initial response to the fundraising has been robust.
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Why redevelopment needs capital earlier in the cycle
Between 2020 and 2025, more than 1,100 society-level redevelopment agreements were recorded in Mumbai. Together, these unlocked around 432 acres of land.
The financing requirement for such projects begins well before construction starts.
This includes society payouts, transit accommodation, premiums and approvals. Banks and NBFCs typically participate later, at the construction finance stage.
This is creating a requirement for capital at an earlier stage of the development cycle, which the new fund is designed to address.
This upfront gap has become an important consideration for developers, as redevelopment projects have grown to become a major part of Mumbai's new housing supply.
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