IL&FS Investment Managers has raised around $895 million (Rs. 43,855 crore) for its second real estate fund. The fund, called the IL&FS India Realty Fund 2(IIRF-2), which was closed on Monday, promised overseas investors a return as high as 25%, the company said on its website.

Compared to a target of $750 million, the company raised $895 million, more than the corpus of its first real estate fund that had raised $525 million in 2006. IIRF-2 has attracted investors from the US, Germany, Japan, and the West Asia. Contributors to IIRF1, the institution’s first fund, also participated in the new offering.

Shahzad Dalal, vice chairman and managing director, IL&FS Managers said the company would generate the promised returns to overseas investors despite estate stocks taking a pounding and property prices softening across India.

Nearly 50% of the investment in the fund has come from US-based investors. The money has been raised at a time when hedge funds worldwide are struggling to raise resources with investors pulling out.

” It’s is a significant endorsement of IIML’s track record investing in the Indian real estate sector. We raised half the funds from the US market a few months ago while the balance were raised from other parts of the globe,” said IL&FS in a statement.

The mobilization also made the fund, IL&FS India Realty Fund-II (IIRF2), one of the largest funds dedicated to the Indian real estate sector. Last month, US banking firm Merrill Lynch raised $2.65 billion to invest in Asian real estate, especially in India, Japan, China and South Korea.

The company said it believes in the underlying strength of the Indian real estate market and remains confident of the long-term prospects of the realty sector. It will also look at furthering its existing relationships with some of the leading real estate developers as well as upcoming developers for its expansion plans. The fund will target residential and commercial real estate in Tier I and Tier II cities across India

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