Motilal Oswal Real Estate (MORE), the real estate arm of Motilal Oswal Private Equity said it raised Rs 1,030 cr under its India Realty Excellence Fund III.
The strong inflow suggests continued investor appetite for investments into companies dealing in this sector despite a slowdown.
MORE till date has invested capital in the real estate sector through three real estate funds and investments.
The first fund had raised Rs 200 cr and the second Rs 500 cr.
The latest Fund (IREF III) has concluded 12 transactions till date across top 6 cities in India with marquee developers, it said.
The Fund is 70% committed and is expected to be fully committed by the end of this financial year having a strong pipeline of deals, it said. In other words, 70% of the money has already been committed for investment.
The Fund focuses on early stage mezzanine and structured equity investments with established developers across the top 6 cities in India.
Mr.Sharad Mittal, Director& Head of Real Estate Funds at MORE said “This is yet another important milestone for MORE as we achieve final close of our third real estate fund. IREF III fund has attracted great interest among investors, once again reflecting the trust in MORE’s focused approach. We would like to thank our investors who have reposed their faith in ourinvestment capability. MORE Funds have generated superior long-term results for its investors.”
“We believe that post RERA (regulatory authority) & GST, consolidation in the industry is inevitable. Only large and serious players havingmeaningful scale, dedicated focus towards timely delivery and customer satisfactionwould do well,” he added.
“Given the RERA regulations, our kind of capital shall become much more suited to these developers going forward.We see significant growth and opportunity in the regularized markets, especially with the continued progress towards broader institutional ownership.”
“We are looking to invest Rs. 1000 Crs in this fiscal year.”
The fund focuses on providing capital at early stages to established developers for their projects in established micro-markets. Indian real estate developers are in dire need for capital due to slowing sales caused by fast appreciation in prices.
Among its investments are Casa Grande (Chennai – 6 investments), ATS Group (Delhi NCR – 4 investments), Shriram Properties (Bangalore – 3 investments) and Rajesh Lifespaces (Mumbai – 3 investments).
It has been focusing on mid income housing (prices ranging between Rs. 4000 – 6500 psft) for the past 4 years. It said the strategy has been validated, with the Government now backing this segment through policies and initiatives like PMAY, Infra Status to Affordable Housing, Interest Subsidy etc.
MORE’s second fund, IREF II, which achieved its final close in 2015, has till date made 13 investments and secured 4 complete exits at an investment level internal return rate of more than 25%.
The Fund has returned ~35% of the money back to its investors within 2 years of its final close, it said.
“Our real estate fund business has scaled up over the past few years and our AUM now stands over Rs 2,000 Crores,” said Vishal Tulsyan, the CEO of MOPE.
“We see abundant opportunities in the sector to scale up and going forward our real estate fund business would continue to be a critical piece of our private equity fund management business.”