Mumbai: Scottish entrepreneur Sir Tom Hunter has teamed up with Icelandic investor Baugur and Britain's HBOS to finance a $100-million fund, set up by property group Catalyst Capital, to invest in India.

Hunter visited India with Baugur CEO Jon Asgeir Johannesson and Catalyst's Julian Newiss last week to conclude the deal.

The fund, which will include $40 million of equity and the rest in debt, will invest in hotel development, house construction and land acquisition, initially in Mumbai.

Although there are significant investment opportunities in the Indian property market, the fund will keep a low profile while remaining a niche player. The strategy is to diversify investment interests outside the UK. Hunter has also concluded deals in continental Europe, China and America recently, a spokesman pointed out.

Hunter owns just under three per cent stake in Icelandic investment group FL Group, which is the biggest shareholder in the parent company of American Airlines. Hunter is believed to have bought that stake also in November 2005. Besides, Hunter has bought five per cent of Icelandic bank Glitnir in partnership with Baugur. FL Group already has a 30-per cent stake in Glitnir.

West Coast Capital, Hunter's investment vehicle, has, meanwhile, taken a stake in Edinburgh-based residential property company Grant Management ahead of the company's planned flotation within two years.

The move comes as Grant Fund Management (GFM), the new fund management arm of Grant Management, takes on a £100 million UK residential property fund established as a joint venture between West Coast and Bank of Scotland Corporate.

GFM already manages another £100 million residential property fund with Bank of Scotland Corporate. The bank has 20-per cent stake in fund, set up last year, while West Coast Capital has taken 5 per cent.