Realty Boom: Certus Capital completes early private credit deal exits worth Rs 250 crore

Certus' investors received net returns of around 15% from the exits

Investment firm Certus Capital has successfully exited five real estate private credit deals ahead of tenure, with a total gross commitment of around Rs 250 crore on the back of strong sales, founder Ashish Khandelia said in an interaction with Moneycontrol on July 15.

Certus inked the deals in 2022 and 2023 through its debt platform, with tenures ranging from two-and-a-half to four years.

All the deals, in the form of structured credit, were extended to multiple developers in Mumbai, Pune and Chennai. Some of investments were made to take over the debt component of projects from other lenders.

The deals by Certus, ranging from Rs 40-80 crore, were made in the high-end Akasa project in Worli, being developed by the Techno Group, Fortune Realty, and Gala. Other investments were to the EON One project in south-central Mumbai, a mid-segment housing project by Pharande Spaces in Pune, and affordable housing projects in Chennai by Arun Excello.

Ashish Khandelia told Moneycontrol the exits provided a net return of around 15 percent for investors, equivalent to an internal rate of return (IRR) of 18-19 percent gross that is targeted by real estate credit AIFs.

“Some of the projects were funded at a time when there market was serious shortage of finance for real estate, in the wake of the IL&FS-triggered NBFC crises and second wave of the pandemic. We had invested in the project not just as working capital or construction finance, but also to provide solutions for various aspects, be it approvals or land buys, given our experience in the segment,” Khandelia, a former director at private equity giant KKR, said during the interaction.

Asked about future investments, Khandelia said the deal pipeline remains strong with a total commitment of Rs 1,500 crore expected in the current fiscal. He added that Certus can consider launching a new fund to channel its investments, with an option of AIF route, or that of the non-banking financial company (NBFC), with Certus holding licences for both.

Khandelia said that after advising deals worth more than Rs 7,000 crore on the buy-side, including in special situation deals that often involved real estate projects, Certus has decided to ramp up its offering in real estate as its private credit business started. In the April-June quarter, Certus signed three deals worth Rs 445 crore, and has now committed a total of around Rs 1,300 crore in funding across 14 projects.

He added that the ongoing deals as well the upcoming ones will be ‘aligned to the investors’, implying structured quarterly or monthly returns rather than back-ended ones. The nature of deals is also expected to remain similar, with developers across cities such as Mumbai, Pune, Bengaluru, Hyderabad, and Chennai being the targets.

Khandelia said that Certus also remains open to non-residential projects, such as hospitality and office spaces, and special situation deals as well.