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Motilal Oswal Real Estate raises 575 Crore for fourth realty fund

Mumbai 17-Sep-2018

Motilal Oswal Real Estate raises 575 Crore for fourth realty fund


Mumbai, 10th September 2018: Motilal Oswal Real Estate(MORE) has announced the first close of IndiaRealty Excellence Fund IV (IREF IV), its fourth real estate fund. The Fundhas raised commitments aggregating to Rs.575 Cr. MORE is part of Motilal Oswal Private Equity (MOPE), which is thealternative investments platform of Motilal Oswal Group. The total AUM underMOPE is more than Rs. 5,000 Cr.

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 focuson early stage structured equity/ structured debt investments with establisheddevelopers and undertake 12-15 transactions of Rs. 80 – 150 Cr each.

Themoney, as part of its fourth real estate fund has been raised from high networth individuals (HNIs) and family offices. The Fund is set up as analternative investment fund (AIF Category II).

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.

Mr. Sharad Mittal, Director & CEO of MORE said “We have raisedRs. 575 Cr. for the fund within 3 months of launch and we would like to thankour investors for reposing faith in our investment capability. In this fund, wehave also witnessed repeat commitments from many existing investors from ourprevious funds.”

“The impact of Govt. policieslike PMAY and introduction of a regulator (RERA) is gradually playing outacross all major cities of India indicating early signs of a recovery inresidential real estate. Nearly 75% of the new units launched are priced underRs. 75 lakh rupees while apartment sizes over the years have fallen by over 12%showing the developer’s affinity towards affordable housing. While sales areshowing modest improvement, prices in all major cities are still stagnant ortrending downwards as developers endeavor to address the inventory overhang.All these factors indicate early signs of a volume-based recovery inresidential real estate”

“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 hasmanifested into a huge opportunity for large and organized players as thesesmall developers will eventually sell their projects at distressed valuations.These are the opportunities where we believe our kind of capital will berequired by the established players going 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 have a strong pipeline ofdeals for our fourth fund and plan to make our first investment in the month ofSeptember”

Mr. Vishal Tulsyan, CEO of MOPE said “We have scaled up the realestate private equity business by more than 10 times in the past 5 years. Weare very positive on this sector and investing in this segment shall continueto be our focus in the coming years”

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 money equaling ~82% of the Fund corpus back to its investors. IREF II has been thebetter performing funds amidst a tough real estate market and the fund was alsoawarded the “Real Estate Fund of the Year – Domestic” at the CNBC Awaaz RealEstate Awards 2016-17.

MORE’s third fund, IREF III,which achieved its final close last year, has till date made 15 investments and secured 2 complete exits at an investment levelIRR of 22.3%. The Fund has returnedmoney equaling ~25% of the InvestibleFunds back to its investors.

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 15investments 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