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Motilal Oswal Real Estate launches fifth fund - IREF V

Mumbai 13-Jan-2021

Motilal Oswal Real Estate launches fifth fund - IREF V

Mumbai, 13th January 2021: Motilal Oswal Real Estate (MORE),the real estate private equity arm of Motilal Oswal Financial Services Limitedis looking to raise up to Rs. 800 Cr. through its recently launched fifth realestate fund “India Realty ExcellenceFund V (IREF V).”

MORE till datehas invested capital in the real estate sector through four real estate fundsand PMS/ NCD investments. Today, cumulative AUM under MORE stands at more thanRs. 3,700 Crs spread across IREF (Rs. 200 Crs), IREF II (Rs. 500 Crs), IREF III(Rs. 1030 Crs), IREF IV (Rs. 1150 Crs) and balance under PMS / NCD Investments.

While the earlier three funds (IREF II, IREF III andIREF IV) focused on early stage investments, IREF V would focus on construction finance in post-approval projects. The Fundplans to deploy the capital in mid-income/ affordable residential projectsacross the top 7 cities in India (Mumbai, Delhi-NCR, Pune, Bangalore, Chennai,Hyderabad and Ahmedabad) while selectively investing in commercial projects.IREF V would focus on structured debt investments with established developersand undertake 12-15 transactions of Rs. 60 – 80 Cr each.

The Fund has been set up as an alternate investmentfund (AIF Category II) registered with stock market regulator SEBI. MOREexpects to achieve first close by March 2021 and conclude fundraising in thenext 6-9 months.

MORE is part ofMotilal Oswal Private Equity (MOPE), which is the alternative investmentsplatform of Motilal Oswal Financial Services Limited. The cumulative AUM underMOPE is more than INR 7,000 Cr.

Mr. Vishal Tulsyan, MD & CEO, MOPE said “Our real estate private equity business has scaled up overthe last decade. We believe that the sector is undergoing a structural shiftand is at the cusp of a transformation. We will continue to grow our presencein this space through value investing over the coming years.”

Mr. Sharad Mittal, Director & CEO of MORE said “The last few years have been challenging for the industry,which has been grappling with a prolonged slump due to the impact of regulatoryreforms and the liquidity crisis created by IL&FS starting September 2018.With NBFCs putting brakes on new lending and banks becoming selective, therehas been a huge gap in construction finance available in the sector over thelast two years. In the last six months following the nationwide lockdown, wehave seen a strong recovery in demand fuelled by multi-decade low mortgagerates, five-year stagnated prices, reducing demand-supply gap in inventory,Government support through stamp duty reductions and the genuine need ofstaying in an owned home during the COVID pandemic. These factors will lead to aresurgence in residential demand over the next few years. We believe that thisis an opportune time to launch our next fund which will focus on constructionfinance and post-approval funding.”

MORE has builtstrong relationships with their development partners in each micro-market. Thisis reflected through the multiple transactions that it has executed with thesedevelopers across its last three funds over the past 4 years. Eg) CasagrandGroup – 11 investments, ATS Group – 7 investments, Shriram Properties – 3investments, Kolte-Patil Developers – 2 investments

With the launchof this fund, MORE will provide a full financial solution to their developerpartners; early stage financing through their earlier funds and post approvalstage/construction financing through this new fund.

The Indianmarket has typically seen private equity financing in the early stages of theproject (land and approvals). However, due to the liquidity crunch that thesector is witnessing over the last 2 years, we believe that there is a fundinggap even in the post-approval stage.

Mittal continues, “In our earlier funds, our investment strategy has beento partner with established developers in early stage investments throughstructured debt in their mid-income/ affordable housing projects. We havefocused more on IT cities and largely stayed out of Mumbai and Delhi NCR due tothe high leverage in these cities. This strategy has worked well for us overthe last few years. In our upcoming fund however, the focus will be to provideconstruction finance in post approval projects. We shall continue to work withour preferred partners and capitalize on our existing strategy.

“This is ourfifth fund. Majority of our investors would be repeat investors from ourprevious funds. We would like to thank them for reposing their faith in us andpartnering with us over the last few years.”

MORE’s secondfund, 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 ~126% of the money back to itsinvestors.

MORE’s thirdfund, IREF III, which achieved its final close in 2017, has till date made 24 investments and secured 6 exits at an investment level IRR of 22.4%. The Fund has returned ~41% of the money back to itsinvestors.

MORE’s fourthfund, IREF IV, which achieved its final close in 2020, is currently underdeployment and has till date made 10 investments.

AboutMotilal Oswal Real Estate

Motilal Oswal Real Estate InvestmentAdvisors II Pvt. Ltd. (MORE) was founded in 2008 as a 100% subsidiary of MOPEInvestment Advisors Pvt. Ltd. (MOPE) – the Private Equity arm of Motilal OswalFinancial Services Limited (MOFSL). MORE is currently managing four real estatefunds, namely India Realty Excellence Fund (IREF), India Realty Excellence FundII (IREF II) & India Realty Excellence Fund III (IREF III) and India RealtyExcellence Fund IV (IREF IV) along with PMS/ NCD Investments. Today, cumulativeAUM under MORE stands at more than Rs. 3,700 Cr. IREF, launched in 2008 is a~Rs 200 Cr domestic real estate fund focused on equity investments in realestate projects in top three cities in India viz. Mumbai, Pune and Bangalore.IREF had made 7 investments and has secured exits in all 7 investments. On the backof its success, MORE launched IREF II - a Rs 500 Cr. domestic real estate fund.IREF II has been fully committed and has invested with established developers.IREF II has made 14 investments till date (including re-investments) andsecured 11 exits at an investment level IRR of 21.3%. The third fund, IREF IIIis a Rs. 1000 Cr domestic real estate fund focusing on early stage structured/mezzanine investments. IREF III has made 24 investments across the top 6 citiesin India with established developers and secured 6 exits at an investment levelIRR of 22.4%. The third fund, IREF III is a Rs. 1150 Cr domestic real estatefund currently under deployment. IREF IV has made 10 investments till date.

Forany query, please contact

Rohini Kute

Head – Group Corporate Communication, Motilal OswalFinancial Services Ltd

+91 98201 96838 / rohini.kute@motilaloswal.com