The money, as part of its third real estate fund, has been
raised from high networth individuals and family offices.
MUMBAI:
Motilal Oswal Real Estate, the private equity real estate fund of Motilal Oswal
Group, has raised over Rs 800 crore to invest in residential projects of
developers in Mumbai Metropolitan Region, Delhi-National Capital Region,
Bengaluru, Pune, Hyderabad and Chennai.
The
money, as part of its third real estate fund, has been raised from high
networth individuals and family offices. The fund set up as an alternative
investment fund, or AIF category II, will target a gross internal rate of
return of 23-25% from its investments. The funds will have a tenure of five
years from final close and two extensions of one year each.
"We
achieved first closure of Rs 600 crore for the fund in four months of the
launch that was done in November. Given the performance of our second fund, we
are witnessing repeat commitments from many existing investors. We are on our
way to conclude entire targeted fund raising of Rs 1,000 crore over the next
three months," said Sharad Mittal, head, real estate fund, Motilal Oswal Real
Estate.
In
March 2015, Motilal Oswal Real Estate had raised Rs 500 crore through its
second real estate fund. This fund is fully committed across eight transactions
in residential projects in top five markets including MMR, NCR, Pune, Bengaluru
and Chennai. The second fund has already returned nearly 30% money to its
investors.
Motilal
Oswal's strategy is an extension of its experience with its earlier two funds
wherein it invested capital, typically under mezzanine structure, in top five
property markets with developers such as ATS, Kolte Patil Developers, Shriram
Properties, Rajesh Lifespaces, Skylark and Casa Grande. The new fund will also
focus on top six property markets in the country.
"Over
the past few years, real estate investing has become one of our key verticals
under the private equity business. We are committed to grow this vertical
further. We now manages a total AUM of Rs 2,000 crore under real estate private
equity," said Vishal Tulsyan, CEO of Motilal Oswal Private Equity Investment
Advisors.
The
first fund worth Rs 200 crore, which Motilal Oswal Real Estate had raised in
2009, has also been fully deployed and is currently in exit mode. The fund has
exited its four out of total seven investments from this fund and has returned
about 86% of the capital.
Recently,
Motilal Oswal Real Estate exited from its investments in Bengaluru-based
Mahaveer Developers' two projects with 30% gross internal rate of return. The
fund is in the process of exiting another investment made in a residential
project of a Chennai-based developer Casa Grande.
"We
have seen the entire real estate cycle, and have acquired expertise across all
investment structures including structured equity, mezzanine and debt
funding," said Mittal. The third fund will look at transactions ranging
between Rs 50 crore and Rs 150 crore across six property markets in the
country.
Several
private equity funds are in the process of raising capital to invest in
residential real estate sector given the ongoing consolidation phase. Many of
these funds expect prices to remain stagnant for some time, and are offering an
opportunity to invest in these projects.
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