Motilal Oswal Alternates (MO Alts), the alternative investments arm of Motilal Oswal Financial Services is set to raise up to Rs 2,000 crore through its sixth real estate fund India Realty Excellence Fund VI (IREF VI) to invest across the top 8 cities of India.
The new fund will focus on early-stage investments in mid-income and affordable residential projects in Mumbai, Delhi-NCR, Pune, Bangalore, Chennai, Hyderabad, Kolkata and Ahmedabad. Additionally, selective investments in commercial projects will also be pursued.
The fund has been set up as an alternate investment fund (AIF) category II and has received the nod from capital market regulator Securities & Exchange Board of India (SEBI). MO Alts expects to achieve first close by December and complete the fund-raising process within the following 6-9 months.
“Over the past decade, our real estate private equity business has experienced significant growth while achieving remarkable milestones. We firmly believe that the real estate sector has undergone a robust structural recovery, underpinned by strong fundamentals, paving the way for a momentum-led growth trajectory,” said Vishal Tulsyan, MD & CEO, MO Alts. “The Motilal Oswal Group related entities will be contributing around 10% of the total corpus of the fund.”
The real estate platform currently manages five real estate funds along with other standalone and proprietary investments. has till date undertaken more than 140 transactions and funded over Rs 7,500 crore across 50 developers in India. It has also achieved exits through more than 70 transactions generating an internal rate of return (IRR) of over 20%. The cumulative assets under management (AUM) under MO Alts is over $2 billion.
Amidst the global challenges posed by the Covid19 pandemic, India has emerged as a pivotal force in the global economy. Despite prevailing global economic slowdowns, the country’s steady domestic consumption and robust macro-economic fundamentals have paved the way for sustained growth.
According to Saurabh Rathi, Co-Head of real estate funds at MO Alts, throughout this period, the Indian property market has demonstrated resilience, remaining buoyant and showing promising signs for the upcoming years.
“This optimism and favorable market outlook have led us to seize the opportune moment to start our next fund. Our focused ground up approach to investing, frugal underwriting and proactive asset management practices have helped us create right levers for the next phase of growth in this tail-winded environment for real estate,” Rathi said.
The platform’s investment strategy centers around partnering with established developers in their mid-income and affordable housing projects through structured debt.
“Early-stage investments in real estate present a significant opportunity, especially considering the crucial capital requirement developers face at the beginning of a project. With various restrictions on Banks and NBFCs to fund this critical phase, coupled with the promising outlook of the real estate market, our fund is strategically positioned to seize this opportunity,” said Anand Lakhotia, Co-Head of real estate funds at MO Alts.
The platform’s last fund, IREF V was a Rs 1,215-crore domestic real estate fund focusing on post approval projects. IREF V has made 15 investments till date and has secured 3 exits at an investment level IRR of 18.1%.
Its fourth fund was a Rs 1,148-crore fund that focused on early stage structured and mezzanine investments. This fund made 37 investments across the top 7 Indian cities with established developers and secured 18 exits at an investment level IRR of 20.7%.
