Global alternative asset management firm Investcorp has raised $130 million (Rs 920 crore) in anchor commitments to provide last-mile lending for affordable and mid-market housing projects in India.
The fund will focus on projects in India’s top seven cities, Bahrain-based Investcorp said in a statement.
BAE Systems Pension Funds Investment Management Ltd, which manages the retirement corpus of the British defence and aerospace firm’s employees, has come in as a cornerstone investor for the platform.
Vikram Aggarwal, head of private markets at BAE Systems Pensions, said there is significant demand for affordable housing projects in India but there is also a lack of institutional capital to fund these projects.
Ritesh Vohra, partner and head of real estate at Investcorp India, said affordable housing has emerged as a dominant segment, augmented by government efforts and the introduction of favourable policies. The current slowdown in the residential markets and in the flow of credit in India create an opportune timing for the firm to launch this new lending initiative, he added.
Sanjay Kohli, a London-based principal at Investcorp, said global investors are looking at the Indian property sector with enthusiasm following policy reforms including the real estate regulatory act and easing of regulations for real estate investment trusts.
These reforms, Kohli said, are helping property markets in India get more transparent, prompting institutional investors to increase their exposure in the country.
Investcorp manages over $28 billion globally and is a mid-market specialist. The firm is an active investor in the US and European real estate markets, targeting properties that generate cash flow and have the potential for capital appreciation through value-add initiatives. Since its inception, the firm has invested in more than 765 properties with total commitment in excess of $18 billion.
Investcorp entered India’s alternative assets management segment last year by acquiring the private equity and real estate investment businesses of IDFC Alternatives Ltd, a subsidiary of IDFC Ltd.
In India, Investcorp’s real estate business has deployed over $200 million through two funds across 27 residential projects in top-tier cities. The funds provided structured senior credit to mid-market and affordable housing projects being developed by well-established developers. The firm also made PE-style bets on Zolo Stays, Citykart, Intergrow Brands, Bewakoof and Nephroplus in 2019.