DLF's Singh to Raise $1 Billion for Fund After Lehman

India, July 5 -- Indian billionaire Kushal Pal Singh's real estate group plans to raise $1 billion this fiscal year for a fund to buy properties after securing financing from Lehman Brothers Holdings Inc. and D.E. Shaw & Co.

DLF Assets Pvt., the fund, plans to sell shares in an initial public offering in the next 18 months to two years, Ramesh Sanka, chief financial officer of group company DLF Ltd., told reporters in Mumbai today. DLF Assets will be a real estate investment trust after the government allows such funds, he said.

Singh is reorganizing his property group after raising $2.2 billion last month in India's biggest initial public offering. Goldman Sachs Group Inc. estimates Asian property owners are planning to sell shares in as many as 15 REITs in a year as real estate offers twice the average return of stocks.

The fund may need as much as $1.5 billion each year to buy properties from developers other than its parent, Sanka said.

DLF Assets acquired 5.5 million square feet of property from New Delhi-based DLF Ltd. and plans to buy additional 7 million square feet this year. It will obtain 10 million square feet each year, he said.

`Barely Sufficient'

Lehman Brothers invested $200 million in DLF Assets and D.E. Shaw, the hedge fund manager, poured in $400 million, DLF Ltd. said in an e-mailed statement yesterday.

``The money is barely sufficient for one quarter of growth,'' Sanka said

REITs raise money from equity investors to buy properties from shopping malls to business parks. They are usually required by law to pay most of their profit as dividends.

New money for property investments is coming from the public REIT market, big developers in China and India and private-equity funds, including those raised by the investment banks, Michael Smith, head of Asian real estate investment banking at Goldman Sachs, said on June 26.

India's government may allow REITS this year. India's markets regulator on June 26, 2006, approved the guidelines for real estate mutual funds.