Motilal Oswal Real Estate announces final close at INR 1,150 Crore forfourth realty fund
Mumbai, 18th April 2020: Motilal Oswal Real Estate (MORE)has announced final close of India RealtyExcellence Fund IV (IREF IV), its fourth real estate fund. The Fund has receivedcommitments aggregating INR 1,150 Cr.MORE has invested capital in the real estatesector through four real estate funds and through the PMS route. The money hasbeen raised primarily from high net worth individuals (HNIs) and familyoffices. At present, the cumulative AUM under MORE stands at more than INR 3,600Crs.
IREF IV’s strategyis an extension of the investment strategy of MORE’s earlier 2 funds (IREF IIand IREF III). The Fund plans to deploy the capital in mid-income/affordableresidential projects and selectively, in commercial projects across the top 6cities in India. MORE has already committed INR 550 Cr across 9 investments inChennai, Pune, Hyderabad and Ahmedabad from this IREF IV fund.
MORE is part of Motilal OswalPrivate Equity (MOPE), which is the alternative investments platform of MotilalOswal Group. The cumulative AUM under MOPE is more than INR 7,000 Cr.
Mr. Vishal Tulsyan, MD & CEO, MOPE said “In our private equity business, we manage an AUM of more than INR7,000 cr. of which 50% is growth capital and 50% is real estate. Over the lastfew years, we have raised 4 funds and have established a successful trackrecord as a domestic fund manager. Investing in real estate is one of theGroup’s core strategies and while we continue to focus on residential realestate, we will also evaluate investing in other asset classes as the sectortransforms in the coming years”
Mr. Sharad Mittal, Director & CEO, MORE said “We have raised INR 1,150 Cr. for our fourthfund during a very challenging period and we would like to thank our investorsfor reposing their faith in our investment capability. Existing investors fromour previous funds have provided commitments to this fund notwithstanding theNBFC crisis during which we have raised this IREF IV fund.”
“Our strategy of partnering withlarge developers in their mid-income/ affordable projects with focus on top 6cities and ensuring financial closure for the projects has worked well in thepast and we shall continue to stick to our investment philosophy goingforward.”
MORE has built strong relationshipswith established developers in each micro-market by providing them capital forearly stage investments. For eg. Casagrand Group (Chennai), Shriram Properties(Bangalore), Phoenix Group (Hyderabad), Kolte Patil Developers (Pune), ATSGroup (Delhi NCR), SD Corp (Mumbai). This is reflected through the multipletransactions that it has executed with these developers across its four fundsin the past few years.
The impact of the recent COVID-19pandemic has been unprecedented wherein trade and businesses worldwide havecome to a halt. It has impacted all sectors, including real estate. In India,since the announcement of the nation-wide lockdown, construction and salesactivity across the entire real estate sector has been on a pause.
MORE believes that while managingcosts and cashflows are key to surviving this lockdown, eventually it will beagility and a strong bias for action that will help developers recover fromthis crisis. Developers that are first-to-act will have a significant advantageover others to recover from this crisis. MORE believes that the lockdown andensuing months of staggered recovery will be the final nail in the coffin formany weak developers and a catalyst for the consolidation process which startedwith demonetization in 2016.
“During this lockdown, effectivemanagement of our portfolio is our top priority. We have been conductingfrequent reviews with our developer partners with the focus being two-fold: a)Managing cashflows during the lockdown and b) Devising a strategy to beexecuted once the lockdown is lifted.”
“With IREF IV, we have adequate drypowder to make new investments. However, considering the global outbreak of COVID-19and its impact, we will maintain a cautious approach towards new investmentcommitments. At this point in time, our priority would be to focus on managingour existing portfolio.”
AboutMotilal Oswal Real Estate
Motilal Oswal Real EstateInvestment Advisors II Pvt. Ltd. (MORE) is the real estate private equity armof Motilal Oswal Financial Services Limited (MOFSL). MORE is currently managingfour real estate funds, namely India Realty Excellence Fund (IREF), IndiaRealty Excellence Fund II (IREF II), India Realty Excellence Fund III (IREFIII) and India Realty Excellence Fund III (IREF IV) along with PMS/ PropInvestments. Today, cumulative AUM under MORE stands at more than INR 3,600 Cr.IREF, launched in 2008 was an INR 200 Cr domestic real estate fund focused onequity investments in real estate projects in top three cities in India viz.Mumbai, Pune and Bangalore. IREF had made 7 investments and has secured exitsin all 7 investments. This fund has been closed. On the back of its success,MORE launched IREF II – an INR 500 Cr. domestic real estate fund. IREF II hasbeen fully committed and has invested with established developers such as ATSGroup, Casagrand Group, Shriram Properties, Kolte Patil Developers, etc. IREFII has made 14 investments till date and secured 11 full exits at an investmentlevel IRR of 21.5%. The third fund, IREF III is an INR 1,000 Cr domestic realestate fund focusing on early stage structured/ mezzanine investments. IREF IIIhas made 24 investments across the top 6 cities in India with establisheddevelopers and has secured 6 full exits at an investment level IRR of 22.4%.The fourth fund, IREF IV, is an INR 1,150 Cr fund having made 9 investmentstill date with a commitment value of INR 550 Cr.
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