Brokerage firm SMC, IM+ Capitals float $75 mn realty fund
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Financial services firm SMC Global Securities Ltd and asset management company IM+ Capitals Ltd have launched a real estate fund focussed on the mid-size affordable housing segment, the firms said in a statement.

The realty fund – SMC IM+ Realty Fund – is looking at a corpus of $75 million and a greenshoe option of up to $75 million, the companies said.

The fund expects commitments from domestic and international individual investors, institutional investors, banks and HNIs.

VCCircle first reported last month that SMC is tying up with IM+ Capitals to mark its entry in the real estate private equity space.

SMC Global and IM+ Capitals are the principal sponsors of the fund. The fund will be forming an investment committee that will consist of investors.

The fund, which is registered with markets regulator the Securities and Exchange Board of India (SEBI), will focus on the affordable mid-segment housing sector across key Indian cities primarily in Mumbai, Pune and Bangalore in Phase I, followed by other cities, the statement said.

The fund will also concentrate on investing against under construction residential and commercial units at deep discounts and generate a fixed interest coupon, it said.

Affordable housing has received a lot of attention, thanks to the Narendra Modi government’s plan to provide housing for all Indians by 2022. In the budget for 2017-18, finance minister Arun Jaitley said he planned to accord infrastructure status to the affordable housing sector while expanding the scope of what constitutes such dwellings and also provided some capital gains taxation relief for sellers of real estate.

“The entire real estate sector is currently undergoing a transformation which is an opportunity for all the stakeholders and investors to invest for a well-defined period of time," said Abhimanyu Londhe, CEO and head of investments, SMC & IM Capitals Investment Manager LLP.

The implementation of the Real Estate (Regulation and Development) Act (RERA Act) has also made businesses get regulated in terms of operations and a predictable delivery schedule, thereby avoiding time and cost overruns, it noted.

Mainstream private equity investors have stayed away from affordable housing, citing thin margins. However, a couple of impact investors, including International Finance Corporation (IFC), have clinched deals in the segment.

Early in May, IFC said it plans to invest up to $40 million (Rs 257 crore) in housing finance company Aavas Financiers Ltd. In April last year, IFC said it planned to invest up to $38 million in three housing finance companies — Aspire Home Finance Corporation, Micro Housing Finance Corporation and Aptus Value Housing Finance India Ltd.

SMC Global

This transaction brings to conclusion SMC’s long-standing plan to venture into the real estate private equity space.

Interestingly, last year, IM+ Capitals, which is controlled by consultancy firm Rudrabhishek Enterprises Pvt. Ltd, had launched its maiden onshore-offshore real estate fund with a target corpus of Rs 1,000 crore, including a green-shoe option of Rs 500 crore.

SMC Global is promoted by Subhash Aggarwal and Mahesh Gupta and has a presence in businesses like brokerage, investment banking, wealth management, distribution of third-party financial products, research, financing, depository services, insurance broking and clearing services to corporates.

The real estate private equity segment is thriving in India’s property market though overall sentiment has been weak for some time. Many new funds have been launched, targeting different segments of the market. Global funds continue to show interest in the market and have formed investment platforms with local fund houses to take exposure to this asset class.

As reported by VCCircle, former chief of consultancy firm JLL India Anuj Puri is in talks to buy the real estate private equity arm of its former employer. Bengaluru-based developer Assetz Property picked up a stake in realty-focussed PE firm Avenue Venture Partners to set up a fundraising platform under its umbrella. The platform is now raising its maiden fund that will invest in warehousing assets across the country.

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