UPDATE 1-Indiareit Fund sells $80 mln investments, plans more exits

Tue Dec 4, 2012 3:47am EST

* Expects to raise another $120 mln through more exits in months ahead

* International PE funds to sell up to $5 bln of Indian investments -consultant (Adds details of plan, executive's quote)

MUMBAI Dec 4 (Reuters) - Indian real estate fund Indiareit Fund Advisors, a unit of drugmaker Piramal Enterprises , said it raised 4.4 billion rupees ($80.48 million) by selling three of its investments and expects to raise another $120 million through more exits in the near future.

The Indian property market has proven to be tough for global private equity funds, who were initially captivated by its growth potential, as developers promised double-digit returns but failed to deliver.

Many of the India-focused private equity funds are trying to exit investments made during 2006-07 as the life of the fund nears its end. They are also exploiting a recent rebound in investment sentiment towards the country.

Indiareit did not say who bought the three investments. The exits included a phased stake sale in a special economic zone and a residential project in Pune in western India and another residential project in Mumbai's western suburbs, it said in a statement.

The fund has already returned about 9.05 billion rupees ($165.52 million) to investors from previous exits in earlier vintage funds and third-party mandates, Indiareit, which manages about 47 billion Indian rupees, said.

International private equity firms, mainly from the United States and Europe, have invested $13 billion in the Indian real estate sector since 2005 and are expected to exit from up to $5 billion worth of investments over the next couple of years, according to property consultancy Jones Lang LaSalle.

"The sentiment has changed. We are trying to do some more exits in the next couple of months," Khusru Jijina, managing partner of Indiareit Fund Advisors, told Reuters. ($1 = 54.6750 Indian rupees) (Reporting by Indulal PM; Editing by Muralikumar Anantharaman)