ICICI Prudential launches real estate sector fund

ICICI Prudential Asset Management Co on Thursday launched a three-year, close-ended debt fund to invest in the real estate sector.

ICICI Prudential Real Estate Securities Fund will initially allocate 70 percent of its assets to debt instruments and the rest in equity and equity-related securities, Nimesh Shah, the fund house's managing director, said at a press conference.

"There is a gap in the debt market due to restrictions on banks for lending to real estate companies," Shah, who is also the chief executive officer, said. "Competition is less and so the yield will be higher."

Currently, under the central bank guidelines, banks are allowed to lend to real estate companies for development of projects but not for land acquisition.

The yield from the debt part of the fund is expected to be 13-14 percent, Shah added.

Subscription to the fund will close on Dec. 14.

The fund house managed assets worth about 562.13 billion rupees as of end-October, according to data from Association of Mutual Funds in India.

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