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Motilal Oswal hits final close of fourth real estate private equity fund
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Motilal Oswal Real Estate (MORE), the real estate arm of private equity firm Motilal Oswal Private Equity (MOPE), today announced that it has hit the final close of its fourth fund at Rs 1,150 crore ($151 million).

India Realty Excellence Fund IV (IREF IV) has raised capital primarily from high net-worth individuals and family offices. Currently, the cumulative asset under management (AUM) of MORE stands at more than Rs 3,600 crore, the company said in a statement.

The latest fund will follow a similar strategy as its two predecessor funds - (IREF II and IREF III). It plans to deploy the capital in mid-income and affordable residential projects and selectively, in commercial projects across the top 6 cities in India.

The company has already committed Rs 550 crore across nine investments in Chennai, Pune, Hyderabad and Ahmedabad from the fourth fund.

“We manage an AUM of more than Rs 7,000 crore of which 50% is growth capital and the remaining 50% is real estate. Over the last few years, we have raised 4 funds and have established a successful track record as a domestic fund manager. Vishal Tulsyan, managing director and CEO at MOPE, said.

“Investing in real estate is one of the group’s core strategies and while we continue to focus on residential real estate, we will also evaluate investing in other asset classes as the sector transforms in the coming years," he said.

Sharad Mittal, director and CEO at MORE, said the firm has raised Rs 1,150 crore for its fourth fund during a very challenging period. “Existing investors from our previous funds have provided commitments to this fund notwithstanding the NBFC crisis during which we have raised this IREF IV fund,” he said.

Mittal said that the firm’s strategy of partnering with large developers in their mid-income and affordable projects with a focus on the top 6 cities and ensuring financial closure for the projects has worked well in the past and the firm continues to stick to its investment philosophy going forward.

MORE has tied up with a bunch of developers across markets over the years. It has backed Casagrand Group (Chennai), Shriram Properties (Bengaluru), Phoenix Group (Hyderabad), Kolte Patil Developers (Pune), ATS Group (Delhi NCR), SD Corp (Mumbai).  It has struck multiple deals with these developers over the years across funds.

The statement further said that the impact of the recent COVID-19 pandemic followed by lockdown has been unprecedented wherein trade and businesses worldwide have come to a halt. It has impacted all sectors, including real estate, construction activities in India, which has been on a pause.

The company said it believes that while managing costs and cashflows are key to surviving this lockdown, eventually it will be agility and a strong bias for action that will help developers recover from this crisis.

According to the statement, developers that are first-to-act will have a significant advantage over others to recover from this crisis. The lockdown and ensuing months of staggered recovery will be the final nail in the coffin for many weak developers and a catalyst for the consolidation process which started with demonetization in 2016.

During this lockdown, effective management is the company’s top priority. It has been conducting frequent reviews with its developer partners with the focus being two-fold: a) managing cashflows during the lockdown and b) devising a strategy to be executed once the lockdown is lifted.

“With IREF IV, we have adequate dry powder to make new investments. However, considering the global outbreak of COVID-19 and its impact, we will maintain a cautious approach towards new investment commitments. At this point, our priority would be to focus on managing our existing portfolio,” Mittal said.

MORE is currently managing four real estate funds, namely India Realty Excellence Fund (IREF), India Realty Excellence Fund II (IREF II), India Realty Excellence Fund III (IREF III) and India Realty Excellence Fund III (IREF IV) along with PMS and Prop Investments.

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