MUMBAI, Aug 2 (Reuters) - European private equity and venture capital company 3i said on Wednesday it is investing $40 million in an Indian real estate fund, the latest foreign firm to tap into a fast-growing sector.
The offshore fund of IndiaREIT, founded by Indian industrialist Ajay Piramal, has a proposed corpus of $160 million. Piramal also has domestic venture fund with a corpus of 3.5 billion rupees ($75 million).
"The Indian real estate market is still young but very promising," Chris Rowlands, 3i's head of group markets, said in a statement.
The fund will invest in Indian real estate projects that have been cleared for foreign investment, including residential, commercial and retail.
Mark Thornton, managing director and co-head of 3i in Asia, will be on the investment committee of the fund.
India's real estate sector is booming due to a focus on building roads, ports and airports, while rapid economic growth is driving demand for apartment blocks, malls and offices.
India eased rules on foreign direct investment in the construction industry early last year, paving the way for a wave of activity and a flurry of deals involving foreign firms.
U.S. pension fund CalPERS has put $100 million into a property fund, while U.S. developer Tishman Speyer has tied up with India's ICICI Bank Ltd. to invest $1 billion.
U.S. investment bank Morgan Stanley may invest $1 billion in Indian construction companies and projects, and the private equity arms of JP Morgan , Lehman Brothers and Merrill Lynch are also looking for deals. ($1=46.6 rupees).
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