Piramal Group and IIFL Wealth Management have set up a Rs 2,000 crore Alternative Investment Fund (AIF) to fund select advance stage or last-mile real estate projects across Tier I cities across India.
The fund will be used to provide capital to Tier I developers in key markets. The market today presents many opportunities for last-mile finance across projects that require a minimum amount of gap funding for completion, the company said in a statement.
“The creation of this AIF is in line with Piramal Group’s strategy to build newer platforms for co-lending with liked-minded reputed institutions. We will initially seed the fund with existing loans from Piramal Group’s portfolio, while continuing to explore quality deals from the market in future,” said Khushru Jijina, Managing Director, Piramal Capital & Housing Finance said.
Piramal Group has a track record of both primary development and wholesale funding in real estate. It also has a fiduciary fund management business across multiple funds and mandates across structured, preferred and pure equity.
IIFL Wealth is a wealth manager with aggregate assets of around Rs 1,70,000 crore under management, advice and distribution.
With this, Piramal will also be facilitating external capital (on a fund or co-investment basis) alongside its lending business. This will enable it to further grow its lending business through a new co-investment/co-origination model.
Karan Bhagat, Founder, MD & CEO, IIFL Wealth Management said, "Piramal's deep domain expertise in real estate and IIFL Wealth's ability to seize the best market opportunities have resulted in well-structured investment idea which will provide clients an ideal risk-adjusted return."
The real estate sector has been undergoing major liquidity issues following the NBFC crisis. The non-banking finance firms have all along been a major source of funding for the sector.
On November 6, the government approved the creation of a Rs 25,000 crore 'professionally managed' fund to boost stalled middle and low-income RERA registered housing projects that are net worth positive.
Finance Minister Nirmala Sitharaman had said the government will put in Rs 10,000 crore in this Alternative Investment Fund (AIF) while State Bank of India and LIC would provide Rs 15,000 crore in total, taking the total size to Rs 25,000 crore.
The fund seeks completion of the 1,508 projects comprising about 4.58 lakh units. It can be utilised even by the projects which have been declared non-performing assets (NPAs) or are facing insolvency proceedings.
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