Amplus Capital raises $30 mn to mark first close for new realty fund

Real estate-focused private equity firm Amplus Capital Advisors has achieved a fundraising milestone in its second outing, scooping up around two-thirds of its Rs 300 crore target ($45 million), it said on Tuesday.

The firm said it has raised Rs 200 crore ($30 million) to mark first close under Amplus Realty Fund – II.

Lalbhai Group co-sponsored Amplus Capital expects to wrap up the fundraising activity to garner the remaining corpus in the next two months.

The fund's promoter Lalbhai Group, a $2 billion group whose flagship firm is Arvind Ltd, has committed 20% of the corpus and the rest has been raised from about 70 investors that include corporate and HNIs from Ahmedabad and Mumbai, managing director Anuranjan Mohnot told VCCircle.

A majority of investors of Amplus Realty Fund – I have participated in the second fund with increased commitments, he added.

Amplus Realty Fund – I is a Rs 135 crore fund raised in 2013. It has invested across eight projects in Bangalore, Chennai, Pune and Ahmedabad, with prominent names in the real estate space including Shriram Properties, XS Real Properties and Assetz Homes.

While the fund I invested in projects with a two to five lakh square feet, the second fund would seek investments in projects with five to six lakh square feet.

Amplus Capital said the new fund is focused on early-stage equity investments in mid-sized residential real estate projects with execution period of 36-42 months and would invest to pick a majority stake. It is looking at an investment ticket size of Rs 20-40 crore per transaction in major metros. The fund is already in talks for its first investment with projects in Pune and Mumbai.

It is also actively looking to back developers to invest in Bengaluru, Chennai, Ahmedabad and Delhi-NCR with a target of 23-25% internal rate of return (IRR).

The five-year fund began the road-show in the last week of February this year and has a commitment size of Rs 2 crore to Rs 2.5 crore from HNIs and Rs 5 crore for corporate investors, Mohnot said.

“Many established developers are traditionally averse to high-cost debt. Further, they are looking for patient equity funding for their new projects. However, they are finding it difficult because there are just a few funds in this space and most of the (realty) funds are focusing on debt/mezzanine funding,” Mohnot said.

Equity capital had almost vanished from the realty funding market over the past few years and most private investment deals in the sector are through debt related transactions. But equity investments in real estate is making a comeback now given the long-term opportunities in the sector.

Although contrarian, the current strategy has been rewarding to the first fund’s investors wherein the fund has completely exited one project (48% IRR and 2.4x multiple) and has made four partial exits out of total eight investments.

Raised in 2013, the first fund has returned half of the capital commitment within three years of the fund’s life and is expected to return the entire capital by the end of this calendar year, with returns flowing over the next 18-24 months. The fund is expected to deliver 25% IRR at the fund level, Mohnot said.

Commenting on the fundraising, Jayesh Shah, co-founder of Amplus, said the fund received positive response from investors and more than 65% of investors of Amplus Realty Fund – I participated in the new fund.

Amplus is co-promoted by Jayesh Shah, director and CFO of Arvind Ltd along with Lalbhai Group and Rohit Choksi, founder of a chartered accountancy firm, GK Choksi & Company.

Amplus Capital joins a bunch of other realty investment firms to raise or reach a fundraising milestone this year. Kotak Realty Fund raised $250 million (Rs 1,600 crore) in its third offshore fund for equity linked deals.

Diversified financial services firm ASK Group also raised Rs 1,400 crore (about $205 million) through its fourth real estate fund for equity only deals.

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