Motilal Oswal Real Estate (MORE) has announced that it has raised Rs 650 crore fund and that it plans to deploy the capital in mid-income/affordable residential projects across the top seven cities in India while selectively investing in commercial projects.
Till date, MORE through its real estate funds and PMS/NCD investments has funded 89 projects via 68 investments and successfully exited 33 investments. With IREF V, MORE’s cumulative AUM is now over Rs 4,400 crore, it said.
IREF V will focus on providing senior secured debt in post-approval projects. The Fund plans to deploy the capital in mid-income/ affordable residential projects across the top seven cities in India while selectively investing in commercial projects. IREF V would undertake 12-15 transactions over its entire fund life.
This Fund has been raised from high net worth individuals (HNIs) and family offices. The Fund is set up as an alternative investment fund (AIF Category II).
MORE is a part of Motilal Oswal Private Equity (MOPE), the alternative investments platform of Motilal Oswal Financial Services Limited. The cumulative AUM under MOPE is more than Rs 7,500 crore.
Vishal Tulsyan, MD & CEO, MOPE said “We believe that the realty sector is currently at an inflection point. With this fund, our cumulative private equity AUM has crossed USD 1 bn and real estate forms a key part of that AUM. We will continue to strengthen our position as a real estate investor by capitalizing on such diverse opportunities over years to come.”
“With this fund, we have repositioned ourselves to cater to capital requirements throughout the project lifecycle providing a complete financing solution and becoming the preferred financial partner for real estate developers. We have raised Rs 650 crore for the fund within three months of launch and we would like to thank our investors for reposing faith in our investment capability,” said Sharad Mittal, director and CEO of MORE.
“There has been a huge gap in construction finance available in the sector over the last two years pursuant to the NBFC crisis and now the COVID pandemic. The real estate sector has gathered a lot of momentum during the last 6-7 months on the back of bottomed-out prices, peak affordability, historically low mortgage rates, Govt. incentives and increasing emotional value of home-ownership during the pandemic. Several developers have clocked record sales in the last two quarters of FY 2021. However, liquidity is still a concern which is where this fund will help our developer partners,” he said.
It has already concluded its first investment in IREF V with Shriram Properties in Bengaluru and has a strong pipeline of deals that it is currently evaluating.
“We plan to complete the fund raising and close the fund in a couple of months,” he said.
MORE’s second fund, IREF II, which achieved its final close in 2015, has till date made 14 investments and secured 11 exits at an investment level IRR of 21.3%. The Fund has returned around 126% of the money back to its investors, the company said.
MORE’s third fund, IREF III, which achieved its final close in 2017, has till date made 24 investments and secured 8 exits at an investment level IRR of 22.6%. The Fund has returned ~52% of the money back to its investors.
MORE’s fourth fund, IREF IV, which achieved its final close in 2020, is currently under deployment and has till date made 13 investments and secured 1 exit at an investment level IRR of 21%, it said.
“The real estate sector continues to be starved of capital, especially for development projects and last mile funding, since the ILFS crisis which was only exacerbated by the pandemic. We saw a smart recovery in the residential sector in the last two quarters driven by stamp duty cuts by some state governments and an opening up of the economy after the first wave of the pandemic," said Sharad Agrawal, Executive Director – Capital Markets at Knight Frank India.
" Over the past year we also saw that the demand has been more resilient in the mid-income and the affordable residential projects across the major markets in India. By focussing on less than 100 crore construction finance in projects with approvals in these markets IREF V is setting itself for success as the economy and demand rebounds after the second wave of the pandemic,” he added.
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