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Investcorp, a leading global alternative asset manager, has raised $ 130 million in anchor commitments for its Indian real estate direct lending initiative.
The funds will primarily provide last mile funding, a market currently going through liquidity crunch.
BAE Systems Pension Funds Investment Management Limited is the cornerstone investor for this initiative, which will focus on projects in the affordable and mid market housing segment in the top seven cities in India and is subject to regulatory approvals and registrations.
Ritesh Vohra, Partner and Head—Real Estate, Investcorp India said that the current slowdown in the residential markets as well as in the flow of credit in India create an opportune timing for Investcorp to launch this new lending initiative.
“This builds upon our track record of similar credit investments in India. Affordable housing has emerged as a dominant segment, augmented by government efforts and the introduction of favourable policy reforms”, he said.
Sanjay Kohli, Principal, Investcorp London said that global investors are looking at the Indian real estate sector with a great deal of enthusiasm following the recent policy reforms including Real Estate Regulatory Act ( RERA), 100 per cent FDI in construction and easing of REIT regulations.
The reforms are helping property markets in India get more transparent prompting institutional investors to increase their exposure in the country.
Vikram Aggarwal, Head of Private Markets, BAE Systems Pensions said: “We believe that the Indian affordable housing segment represents a sizeable and attractive market opportunity catalysed by urbanisation and structural reforms. BAe Systems is pleased to make a positive contribution to the development of affordable housing in India, where there is significant demand, but a lack of institutional quality capital to fund projects”.
It may be recalled that last mile funding issues had affected the residential real estate market, prompting the government itself to recently intervene to set up a Rs 25,000 crore alternative investment fund to provide relief to developers with unfinished projects so as to ensure delivery of homes to buyers.
In India, Investcorp’s real estate business has already deployed over $200 million through two funds across 27 residential projects located in top tier cities. The funds provided structured senior credit to mid-market and affordable housing projects being developed by well established developers.
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