Former Essel Financial CEO raises $65M realty fund, planning another fund

The former chief executive officer of Essel Financial Services Amit Goenka has raised a residential real estate focused fund with a corpus of $65 million (Rs 400 crore). This development comes almost a year after Goenka moved on from Essel.

The fund has been raised under Nisus Finance Services Co Pvt Ltd (NIFCO), an investment management company formed by Goenka after he quit Essel Group.

The first fund under the newly minted company by Goenka has demarcated two slabs for deploying capital across realty deals. First, through debt instruments by subscribing to non-convertible debentures (NCDs) and second, by bulk-buying inventory from developers at a deep discount. Both—debt and bulk-buying deals—will attract Rs 200 crore each from the fund.

“We have employed a strategy wherein we get assured returns by sealing debt deals through NCDs and also get the benefit of equity kicker through inventory buying practice,” said Amit Goenka, managing director and chief executive officer, NIFCO.

Under the fund, Goenka is chasing investments in mid-market residential projects where he will deploy capital in mid-to-late-stage of construction.

The fund has so far deployed Rs 170 crore across three projects in Delhi NCR and Mumbai and has committed another Rs 30 crore for the fourth investment. The preferred location for investments for the fund is Mumbai, Delhi-NCR, Pune, Chennai for debt deals and active micro markets of these locations for bulk-buying deals.

“We have seen a slowdown in sales velocity across locations and therefore it becomes important for us to become cautious about our choice of location in these cities,” he said.

In his first outing, Goenka has tapped domestic limited partners (LPs) which include family offices and financial institutions.

A new fund on the anvil

While he is on his way to deploy capital from the maiden fund, he is simultaneously planning to come out with another residential real estate focused fund with a corpus of Rs 400 crore. In the second outing, the aim of the fund house is to tap larger number of domestic LPs by engaging individual investors beyond family offices and financial institutions. “We will be replicating the same model as first fund and deploying capital across debt and bulk-buying deals,” said Goenka.

NIFCO plans to hit the market for scooping capital for the new fund towards the end of this financial year.

(Edited by Joby Puthuparampil Johnson)

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