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Motilal Oswal Real Estate launches 1,500 Crore realty fund

Mumbai 14-May-2018

Mumbai, 14th May 2018: Motilal Oswal Real Estate (MORE) islooking to raise up to Rs. 1,500 Cr. through its recently launched fourth realestate fund “India Realty ExcellenceFund IV (IREF IV). MORE is part of Motilal Oswal Private Equity (MOPE),which is the alternative investments platform of Motilal Oswal Group. The totalAUM under MOPE is more than Rs. 5,000 Cr.

Mr. Vishal Tulsyan, CEO of MOPE said “Our real estate fund businessunder the leadership of Sharad Mittal has scaled up over the past years and ourcumulative AUM now stands over Rs 2,100 Crores. Our real estate fund businesscontinues to be a critical piece of our private equity fund managementbusiness. We are bullish on the Indian story and see abundant opportunities inthe sector to scale up as we seek to achieve an AUM of more than $ 1 Billionover the next 3 years.”

MOREtill date has invested capital in the real estate sector through three realestate funds and PMS/ Prop investments. Today, cumulative AUM under MORE standsat more than Rs. 2,100 Crs spread across IREF (Rs. 200 Crs), IREF II (Rs. 500Crs), IREF III (Rs. 1030 Crs) and balance under PMS / Prop Investments.

TheFund has been set up as an alternate investment fund (AIF Category II)registered with SEBI. MORE expects to achieve first close by August 2018 andconclude fundraising in the next 9-12 months.

IREFIV’s strategy would be an extension of the investment strategy of MORE’searlier 2 funds (IREF II and IREF III). The Fund plans to deploy the capital inmid-income/ affordable residential projects across the top 6 cities in Indiawhile selectively investing in commercial projects. IREF IV would focus onearly stage structured equity/ structured debt investments with establisheddevelopers and undertake 12-15 transactions of Rs. 80 – 150 Cr each.

Mr. Sharad Mittal, Director & CEO of MORE said “The last 5years had been challenging for the industry with developers battling low salesvelocity and low consumer confidence. However, in the last 18 months, we haveseen a slew of reforms by the Government that has compelled the developers tobring about a radical change in the way they go about their business. Webelieve that the sector will go through a recovery cycle over the next 5years.”

“Five years back, we had decidedto focus on affordable/ mid-income housing (prices ranging between 4000 – 6500psft) as we believed that this segment would stay resilient to the tough marketconditions. This decision has played out well for us as the Government has inthe past years committed to boost affordable housing in India through policies/initiatives like PMAY, Infrastructure Status, Interest subsidy etc.”

MORE believes that Governmentwill have to continue to focus on real estate and construction sector for Indiato achieve its targeted GDP growth of 8% for the next few years.

“Consolidation has emerged as thedominant theme with large and organized players becoming clear beneficiaries ofthe RERA regime. Under this strict regime, the small sized developers havefound the task of completing their stalled projects very daunting. This haspresented the large and organized players a huge opportunity as these small developerswill eventually sell their projects to them. These are the opportunities wherewe believe our kind of capital will be required by the established playersgoing forward.”

MORE has built strongrelationships with established developers in each micro-market by providingthem capital at the right time (early stage investments). This is reflectedthrough the multiple transactions that it has executed with these developersacross its three funds in the past 4 years. Eg) Casagrand Group – 6 investments(Chennai), ATS Infrastructure – 5 investments (Delhi-NCR), Rajesh Lifespaces –3 investments (Mumbai), Shriram Properties – 2 investments (Bangalore)

“We see a transition of investorinterest from physical assets to financial assets in real estate and we believethat our latest fund IREF IV shall be a preferred platform for these kinds ofinvestors.”

MORE’s second fund, IREF II,which achieved its final close in 2015, has till date made 14 investments and secured 7complete exits at an investment level IRRof 22.1%. The Fund has returned ~81%of the money back to its investors. IREF II has been the better performingfunds amidst a tough real estate market and the fund was also awarded the “RealEstate Fund of the Year – Domestic” at the CNBC Awaaz Real Estate Awards2016-17.

MORE’s third fund, IREF III,which achieved its final close last year, has till date made 13 investments and secured 2 complete exits at an investment levelIRR of 22.3%. The Fund has returned ~29% of the money back to itsinvestors.

 

About MotilalOswal Real Estate

Motilal Oswal Real EstateInvestment Advisors II Pvt. Ltd. (MORE) was founded in 2008 as a 100%subsidiary of MOPE Investment Advisors Pvt. Ltd. (MOPE) – the Private Equityarm of Motilal Oswal Financial Services Limited (MOFSL). MORE is currentlymanaging three real estate funds, namely India Realty Excellence Fund (IREF),India Realty Excellence Fund II (IREF II) & India Realty Excellence FundIII (IREF III) along with PMS/ Prop Investments. Today, cumulative AUM underMORE stands at more than Rs. 2,100 Cr. IREF, launched in 2008 is a ~Rs 200 Crdomestic real estate fund focused on equity investments in real estate projectsin top three cities in India viz. Mumbai, Pune and Bangalore. IREF had made 7investments and has secured exits in all 7 investments. On the back of itssuccess, MORE launched IREF II - a Rs 500 Cr. domestic real estate fund. IREFII has been fully committed and has invested with established developers suchas ATS Group, Casagrand Group, Shriram Properties, Kolte Patil Developers etc.IREF II has made 14 investments till date (including re-investments) andsecured 7 full exits at an investment level IRR of 22.1%. The third fund, IREFIII is a Rs. 1000 Cr domestic real estate fund focusing on early stage structured/mezzanine investments. Currently in deployment stage, IREF III has made 13investments across the top 6 cities in India with established developers andsecured 2 full exits at an investment level IRR of 22.3%.

 

For Further Details Contact:

Rohini Kute

Head of Corporate Communications, Motilal Oswal Financial Services

Mob +91 9820196838

Mail: rohini.kute@motilaloswal.com

Alpesh Nakrani

Paradigm Shift Public Relations

Mob +91 98691 21167

Ph-   +91 22 2281 3797 / 98