The maiden real estate fund of Axis Asset Management Company Ltd, which is a unit of private-sector lender Axis Bank Ltd, has inked its first deal.
Axis RERA Opportunities Fund–I has invested Rs 60 crore (around $8.6 million at the current exchange rate) in a township project of Chennai-based developer Akshaya Group.
The township project, Orlando, is situated in the Old Mahabalipuram Road area on the outskirts of Chennai. Akshaya is looking to capitalise on the IT campuses that have sprung up around the area which has led to massive growth of residential and commercial projects.
“The project is an ideal one in the mid-market segment in that locality,” Balaji Rao, managing partner-real estate at Axis AMC, said in a statement. “Going forward, we see a synergistic relationship between Axis and Akshaya. I believe that in the future real estate will be tilting towards themed and serviced projects.”
The development comes weeks after Axis AMC’s announcement that it had hit the final close of its maiden real estate fund at Rs 400 crore ($58 million).
The maiden fund raised capital from domestic institutions, high-net-worth individuals and Axis AMC, the sponsor of the fund.
It will deploy the capital mostly through the structured debt route across the top eight cities of the country.
At the time of closing the maiden fund, Rao had said that the property market has been going through tough times over the past few months with developers facing a liquidity crunch and a change in their business models owing to new regulations.
“However, this is the opportune moment for value investors to identify and back real estate companies that can deliver results in these new conditions,” he had said.
Axis AMC offers a bouquet of asset management products across mutual funds, portfolio management services and alternative investment funds.
The AMC unit has two shareholders -- Axis Bank and Schroders Singapore Holdings Pvt. Ltd.
Akshaya Group was founded in 1995 and is led by chairman and chief executive T Chitty Babu.
According to its website, Akshaya is embarking on a huge expansion drive to major markets in southern India. It is close to completing premium residential spaces and commencing luxury homes and commercial projects in Coimbatore, Trichy and Salem in addition to Chennai.
Akshaya has also diversified into the hospitality sector through Akshaya Hotels & Resorts Pvt. Ltd., which runs a chain of restaurants and is in the process of developing select resorts.
Real estate investment climate
Given the sluggish performance of the residential real estate market, the need for capital has grown manifold in the backdrop of the liquidity crisis affecting non-financial banking companies.
While only a handful of firms have managed to scoop up capital in the last two to three years, some have managed to do well even in difficult times. These include Motilal Oswal Real Estate and ASK Property Investment Advisors, among others.
ASK Property Investment Advisors recently backed a bunch of residential and commercial projects in Pune with an investment of Rs 350 crore.
Motilal Oswal Real Estate (MORE), the property investment arm of Motilal Oswal Group, recently hit the second close of its fourth fund at Rs 850 crore ($124 million).
The latest fund has already committed Rs 250 crore across four projects in Chennai, Pune and Hyderabad.