Motilal Oswal Real Estate, the real estate arm of Motilal Oswal Private Equity, has marked the final close of its third fund, India Realty Excellence Fund III (IREF III), at Rs 1,030 crore (around $158 million).
To date, the firm has invested capital through three real estate funds, non-convertible debentures (NCDs) and proprietary investments. Its cumulative assets under management (AUM) stand at more than Rs 2,000 crore spread across funds and other strategies.
IREF III focuses on early-stage mezzanine and structured equity investments with established developers across the top six cities in the country. The fund has concluded 12 transactions to date. It has committed 70% of the corpus and the rest is expected to be fully committed by the end of this financial year.
Sharad Mittal, director and head of Real Estate, Motilal Oswal Real Estate, said, “This is yet another milestone for Motilal Oswal Real Estate as we achieve the final close of our third real estate fund. IREF III fund has attracted great interest among investors, once again reflecting the trust in Motilal Oswal Real Estate’s focused approach. Motilal Oswal Real Estate’s funds have generated superior long-term results for its investors.”
“After Real Estate (Regulation and Development) Act (RERA) and goods and services tax (GST), consolidation in the industry is inevitable. Only large players having a meaningful scale, dedicated focus towards timely delivery and customer satisfaction would do well. We see significant opportunity in the regularised markets, especially with the continued progress towards broader institutional ownership,” Mittal said in a statement.
The PE firm is looking to invest roughly Rs 1,000 crore this financial year.
Vishal Tulsyan, chief executive officer, Motilal Oswal PE, said, “Our real estate fund business has scaled up over the past few years and our AUM now stands over Rs 2,000 crore. We see abundant opportunities in the sector to scale up. Going forward, our real estate fund business would continue to be a critical piece of our private equity fund management business.”
Motilal Oswal Real Estate’s investment strategy is based around providing capital to established developers for their projects in established micro-markets. Some of the developers it has done repeat transactions with include Casa Grande (Chennai – six investments), ATS Group (Delhi NCR – four investments), Shriram Properties (Bangalore – three investments), Rajesh Lifespaces (Mumbai – three investments), among others.
Motilal Oswal Real Estate’s second fund, IREF II, which achieved its final close in 2015, has to date made 13 investments and secured four complete exits at an investment level internal rate of return of more than 25%. The fund has returned 35% of the money back to its investors within two years of its final close.
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