Oman Investment Fund, a sovereign fund of the Sultanate of Oman is investing about $125 million for a 50 per cent stake in an Indian realty firm based in Mangalore.

The fund, through a Cyprus-incorporated entity, is investing in Mohtisham Estates, a joint venture developing a 300-acre integrated township on the Mangalore-Bangalore highway, sources privy to the development were quoted in the Economic Times report.

The deal is probably the largest fund action in Indian tier-II real estate.

“We can confirm that Oman Sovereign fund has taken a stake in the project,” he said. He, however, refrained from divulging financial details of the transaction,' said SM Arshad, chief of Mohtisham.

Mohtisham is a nearly two-decade-old realty player with established ties in the Arabian Gulf. It is believed that the transaction was a direct one and did not go through a market process.

Several Middle-East sovereign funds have been scouting for opportunities in India’s real estate and infrastructure sector as they have a liking for investments backed by physical assets and those are broadly in line with Shariah principles. Sovereign funds of Abu Dhabi, Saudi Arabia, Oman and Qatar are active in the country at the moment.

Oman fund’s investment would flow into the 18-19 million sq ft project  in a phased manner and could even top $125 million, sources added.

For a while now, sectoral experts have been predicting the emergence of big real estate play in India’s tier-II, or even tier-III, centres. And this deal could be one of the early precursors to a developing story.

Sources said work on the project would start early next year and is likely to be completed over eight years. The first phase of the project is expected to hit the market in three years. The township will have residential units, a mall, schools, hotel and a special economic zone.

'Mangalore, given its proximity to Manipal, is already an education hub. It has large overseas linkages especially with the Middle-East and is an expanding port city,” explained one sectoral observer.