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MUMBAI: Motilal Oswal Real Estate (MORE), the real estate arm of Motilal Oswal Private Equity, has raised over Rs 575 crore through the first close of its fourth real estate fund India Realty Excellence Fund IV (IREF IV).
The fund plans to deploy the capital in mid-income and affordable residential projects across six top cities in India while selectively investing in commercial projects.
The new fund’s investment strategy will be an extension of the strategy of MORE’s two earlier funds, IREF II and IREF III.
IREF IV would focus on early stage structured equity and debt investments with established developers and undertake 12-15 transactions with average size of Rs 80 crore to Rs 150 crore each.
“We have achieved the first close worth Rs 575 crore for the fund within three months of launch.
In this fund, we have also witnessed repeat commitments from many existing investors from our previous funds,” Sharad Mittal, director CEO, MORE, told ET.
The money has been raised from high net worth individuals (HNIs) and family offices.
The fund was set up as an alternative investment fund (AIF Category II).
Till date MORE has invested capital in the real estate sector through three real estate funds and portfolio management services (PMS) and proprietary (Prop) investments.
Currently, MORE has assets under managment (AUM) exceeding Rs.
2,100 crores.
Of this, IREF has AUM of Rs 200 crore, IREF II has Rs 500 crores, IREF III Rs 1,030 crores and balance under PMS / Prop Investments.
MORE is part of Motilal Oswal Private Equity (MOPE), which is the alternative investments platform of Motilal Oswal Group.
The total AUM under MOPE is now over Rs 5,000 crore.
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 level internal rate of return (IRR) of 22.3%.
The fund has returned money equalling 25% of the investible funds back to its investors.
MORE’s second fund, IREF II achieved its final close in 2015 and has till date made 14 investments and secured 7 complete exits at an investment level IRR of 22.1%.
The fund has returned nearly 82% of the fund corpus back to its investors.
Through three of its earlier funds, MORE established its partnership with various developers over the last four years.
It has made six investments in Chennai’s Casagrand Group, five in Delhi-National Capital Region’s ATS Infrastructure, three in Mumbai’s Rajesh Lifespaces and two in Bangalore’s Shriram Properties.
“We have scaled up the real estate private equity business by more than 10 times in the past five years.
We are very positive on this sector and investing in this segment shall continue to be our focus in the coming years,” said Vishal Tulsyan, CEO of MOPE.
The fund, according to Mittal, has a strong pipeline of deals for its fourth fund and plans to make its first investment over the next few weeks.
The impact of government policies like Prime Minister Awas Yojna and introduction of a regulator (RERA) is gradually playing out across all major cities of India indicating early signs of a recovery in residential real estate.
Nearly 75% of the new units launched are priced below Rs 75 lakh while apartment sizes over the years have fallen by over 12% showing the developer’s affinity towards affordable housing.
Experts believe that while sales are showing modest improvement, prices in all major cities are still stagnant or trending downwards as developers endeavour to address the inventory overhang.
All these factors indicate early signs of a volume-based recovery in residential real estate and offer a good investment opportunity for institutional investors.
