A private equity fund of JM Financial Ltd is investing Rs 40 crore ($5.7 mn) in Coimbatore-based co-living space provider Isthara Parks Pvt. Ltd.
The Mumbai-based financial services company said in a statement that this is the fourth investment by JM Financial India Fund II, a sector-agnostic growth-capital private equity fund.
The fund invests in high-growth, small to mid-market companies in financial services, consumer, IT and ITeS, infrastructure services and manufacturing sectors.
Isthara Parks will use the money to fund its expansion plans in its existing markets of Hyderabad, Bengaluru and the national capital region initially as well as in other key cities in Asia thereafter.
“Isthara has been growing consistently since it was founded and we strongly believe in the management’s disciplined approach,” said Darius Pandole, managing director and CEO for the private equity business at JM Financial.
Pandole also said that the co-living sector in India is at an early stage but is “rapidly evolving to appeal to a larger and broader tenant base” because its cheaper and convenient.
Isthara provides fully-furnished shared-living accommodation for working professionals and students, along with amenities such as meals, internet, gym and housekeeping service. Currently, it manages about 3,000 beds across 29 properties in Hyderabad, Bengaluru and the national capital region.
AZB & Partners, Jones Lang LaSalle and Nine Rivers Capital Advisors were the advisers on the deal.
Deals in the segment
Until recently, co-living spaces in India were almost exclusively the domain of venture capital firms such as Sequoia Capital, Tiger Global and Accel. But deep-pocketed private equity investors now appear to be getting in on the action, as documented by a recent VCCircle analysis.
At least 20 co-living startups have raised capital in the last 18 months, according to VCCEdge https://www.vccedge.com/, the research arm of Mosaic Digital.
Late last year, Warburg Pincus marked the first instance of a bulge-bracket PE firm investing in a co-living platform in India, forming a Rs 4,000 crore (around $570 million) joint venture with Mumbai-listed hospitality chain Lemon Tree Hotels.
In January, Mumbai-based co-living space provider Zolo raised $30 million in a Series B round of funding led by private equity firm IDFC Alternatives, South Korea's Mirae Asset and existing investor Nexus Venture Partners.
Last year, Housing Development Finance Corporation (HDFC) also agreed to pick up 25% stake in Goldman Sachs-backed Good Host Spaces Pvt. Ltd, which offers student housing facilities under the brand name NewDoor (previously Yoho), for Rs 69.5 crore (a little less than $10 million) in a cash deal.
Other co-living startups to have raised capital over the past year include Stanza Living, OxfordCaps, NestAway and StayAbode.
Budget hotel chain OYO has also diversified into co-living under the brand OYO Life.