Kotak Realty Fund backs Shriram Properties project
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Kotak Realty Fund, part of the alternative assets arm of Kotak Mahindra Group, has invested Rs 40 crore ($5.6 million) to pick up a 50% stake in a housing project of Shriram Properties Ltd.

As per the agreement, Kotak India Affordable Housing Fund-I will invest in the second phase of Shriram Properties’ township project Shriram Grand City in Uttarpara, Kolkata.

Kotak India Affordable Housing Fund is managed by Kotak Investment Advisors Ltd and counts CDC Group, a development finance institution owned by the UK government, as an anchor investor.

The second phase of the project is titled Shriram Grand 2, the Bengaluru-based developer said in a statement.

Shriram Grand 2 will have 3,000 units across an area of 2.1 million sq ft. The first phase of the project has 2,300 units with aggregate saleable area of around 2 million sq.ft.

“This investment is in alignment with our strategy of an affordable housing fund with CDC Group, to invest in affordable housing projects with a developer of repute and proven capabilities,” said S Sriniwasan, managing director and chief operating officer, Kotak Investment Advisors.

VCCircle had reported in December that CDC Group had committed up to $50 million to KIAHF, Kotak Realty Fund’s first affordable housing vehicle. 

The aim of the fund is to invest in affordable housing development projects primarily focussed on India’s poorest and most capital-starved states. The fund aims to back projects that will offer housing units valued up to $50,000 (around Rs 36 lakh), a segment that will target customers with annual income of $7,000-12,000 such as teachers, civil servants and small-business owners.

The affordable and mid-income housing segment has started to attract investors over the last few years. Developers have also been working towards increasing their stock. In addition, the government has also been pushing affordable housing initiatives. With the intention to ease stress among developers, the interim budget for 2019-20 extended the tax benefit period for players developing affordable housing projects for one more year till March 2020

Last year, HDFC Capital picked up a significant minority stake in HomeKraft, the affordable and mid-income housing arm of North India-based ATS Group. 

Shapoorji Pallonji has the backing of Standard Chartered Private Equity, Asian Development Bank and International Finance Corporation for its affordable housing projects. 

Shriram Properties had last year raised Rs 1,000 crore from ASK PIA, the property investment arm of ASK Group, to fund affordable and mid-income housing projects.

Shriram Properties is part of the financial services giant Shriram Group. The developer has a strong presence across southern India with a diverse portfolio that comprises more than 20 million sq ft of built-up space and around 45.85 million sq ft under development.

Shriram Properties, which counts TPG, Walton Street and Tata Capital Fund among its investors, is planning to float an initial public offering (IPO) in the coming months to give an exit to these investors. 

The developer has also raised funding in the past from the investment arm of Mitsubishi and Motilal Oswal Private Equity for special purpose vehicles. 

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