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Motilal Oswal Real Estate clocks two more exits from second fund

13 November, 2017

Motilal Oswal Real Estate (MORE), the realty investment arm of Motilal Oswal PE, has exited two more investments from its second fund, the PE firm said.

It has exited two Bengaluru projects of Skylark Mansions and Mahaveer Developers.

India Realty Excellence Fund II had put in around Rs 60 crore in a Skylark project in 2015, while its investment in Mahaveer was not disclosed earlier. Both exits were struck in November.

Recently, Skylark had raised Rs 105 crore from Xander Finance to allow Motilal Oswal Real Estate to exit.

Of late, many NBFCs, including Xander Finance and Altico Capital, have ramped up their refinancing activity, primarily to give existing investors an exit route while backing real estate developers. Only a small portion of the funding is used for construction or general corporate purpose.

The Rs 500-crore second fund, which was closed in 2015 and had made 14 investments, has so far exited six companies with a 25.7% average internal rate of return.

The company said that within two and a half years of the final close, the fund has divested 108% of the fund size and has returned 64% of the money back to investors.

Sharad Mittal, director and head of real estate funds, Motilal Oswal Real Estate, said: “The last three to four years have been tough for the sector with developers battling low sales velocity and low consumer confidence. However, our strategy of partnering with dominant players in each micro-market and focusing on mid-income housing projects (Rs 4,000-6,500 per sq ft) has played out well for us.”

According to Mittal, MORE has forged strong relationships with its development partners by providing them capital at the right stage (early stage investments). In the past four years, it has done multiple transactions with developers, such as ATS Group, Casa Grande and Shriram Properties, through its three funds.

“Structural changes in the form of RERA and GST have led to increased compliance by developers. Consolidation is already being witnessed in the industry and the industry shall gradually progress towards broader institutional ownership. We believe our kind of capital will become much more suited for developers.”

MORE’s third and latest fund, India Realty Excellence Fund III, clocked its final close in August at Rs 1,031 crore. Ii is in the investment phase and has committed more than 80% of its corpus.

As reported by VCCircle, the PE firm had recently deployed around Rs 50 crore in a project of Bengaluru-based Gardeb City Builders Pvt Ltd.

MORE’s cumulative assets under management is over Rs 2,000 crore.

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Motilal Oswal Real Estate clocks two more exits from second fund

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