Cash-rich Piramal Group unveils $500 million realty debt fund

India’s business conglomerate Piramal Group and a Canada Pension Plan Investment Board (CPPIB) subsidiary announced on Wednesday a strategic alliance through a $500 million fund which would invest in the country’s real estate market by way of rupee debt.

Piramal and CPPIB firm Credit Investments will contribute equally into the fund, which seeks to invest in residential properties in India’s large cities of Mumbai, Delhi, Bangalore, Chennai and Pune. Both partners will contribute $250 million each towards the fund.

The fund will be managed by Indiareit Fund Advisors, the real estate equity arm of Piramal Enterprises.

[caption id=“attachment_76140” align=“alignleft” width=“380”]  Ajay Piramal. Reuters[/caption]

“This opportunity allows us to participate in India’s burgeoning middle class residential sector which has demonstrated compelling fundamentals through ongoing population and income growth, and rapid urbanization,” Graeme Eadie, senior vice-president and head of real estate investments, CPPIB said in a statement.

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Ajay Piramal chairman of Piramal Enterprises said, “The investment we bring in is through internal accruals.”

Piramal - who has invested in a range of businesses from road building to renewable energy – has been keen to sell his company’s 11 percent stake in telecom giant Vodafone India.

The cash-rich Piramal Group has been scouting for business opportunities after selling its local generic drug business to Abbott Laboratories in 2010 in a $3.8 billion deal.