The real estate private equity arm of Motilal Oswal Private Equity (MOPE) said it has hit the first close of its fifth fund at Rs 650 crore ($89 million), a fundraising milestone after which managers start deploying money.
Four months back in January, Motilal Oswal Real Estate (MORE) had announced the launch of India Realty Excellence Fund V (IREF V) (https://www.vccircle.com/motilal-oswal-real-estate-floats-fifth-fund/) with a corpus target of Rs 800 crore.
“We have raised Rs 650 crore for the fund within three months of launch. With this fund, we have repositioned ourselves to cater to capital requirements throughout the project lifecycle providing a complete financing solution and becoming the preferred financial partner for real estate developers,” Sharad Mittal, director and chief executive officer, MORE, said.
The latest fund has sealed its maiden deal with Shriram Properties in Bengaluru, which has been reported. The firm aims to complete the fundraising and close the fund in a couple of months.
IREF V, which aims to offer senior secured debt for post-approval projects, will deploy capital in mid-income/affordable residential projects across top seven cities in India while also selectively investing in commercial projects.
The fund will create a portfolio of 12-15 transactions over its lifecycle. The capital for the fund has been raised from high net worth individuals (HNIs) and family offices.
Vishal Tulsyan, managing director and chief executive officer of MOPE, said, “We believe that the realty sector is currently at an inflection point. With this fund, our cumulative private equity AUM (assets under management) has crossed $1 billion and real estate forms a key part of that AUM. We will continue to strengthen our position as a real estate investor by capitalising on such diverse opportunities over years to come.”
Mittal said, “There has been a huge gap in construction finance in the sector over the last two years in the wake of the NBFC (non-banking financial company) crisis and now the pandemic. The real estate sector has gathered a lot of momentum during the last six to seven months on the back of bottomed-out prices, peak affordability, historically low mortgage rates, government incentives and increasing emotional value of home-ownership during the pandemic. Several developers have clocked record sales in the last two quarters of 2020-2021. However, liquidity is still a concern which is where this fund will help our developer partners.”
The release said that MORE’s second fund, IREF II, which achieved its final close in 2015, has till date made 14 investments and secured 11 exits with 21.3% internal rate of return (IRR).
The fund claims to have returned 126% of the money to investors.
The statement also said that the third fund, IREF III, which achieved its final close in 2017, has till date made 24 investments and secured eight exits with 22.6% IRR. It claims to have returned 52% of the money to its investors.
The fourth fund, IREF IV, which achieved its final close in 2020, is currently under deployment and has till date made 13 investments and secured one exit at 21% IRR.
MORE, through its real estate funds and PMS/NCD (portfolio management services/non-convertible debenture) investments, has funded 89 projects via 68 investments and successfully exited 33 investments.
With the fifth fund, MORE’s cumulative AUM is now over Rs 4,400 crore.
MORE is a part of Motilal Oswal Private Equity (MOPE), the alternative investments platform of Motilal Oswal Financial Services Ltd. The cumulative AUM under MOPE is more than Rs 7,500 crore.