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Motilal Oswal Real Estate (MORE), the real estate private equity arm of Motilal Oswal Financial Services Ltd, is looking to raise up to ₹800 crore through its fifth real estate fund, India Realty Excellence Fund V (IREF V).
The fund has been set up as an alternate investment fund (AIF Category II) registered with SEBI. MORE expects to achieve first close by March 2021 and conclude fund-raising in the next 6-9 months.
While its earlier three funds – IREF II, IREF III and IREF IV – focused on early-stage investments, IREF V would focus on construction finance in post-approval projects. The fund plans to deploy capital in mid-income and affordable residential projects across the top 7 cities in the country, MORE said in a statement.
Value investing
“Our real estate private equity business has scaled up over the last decade. We believe that the sector is undergoing a structural shift and is at the cusp of a transformation. We will continue to grow our presence in this space through value investing over the coming years,” Motilal Oswal Private Equity (MOPE) Managing Director and CEO, Vishal Tulsyan, said.
The fund will selectively invest in commercial projects across the top 7 cities of Mumbai, Delhi-NCR, Pune, Bengaluru, Chennai, Hyderabad and Ahmedabad. IREF V would focus on structured debt investments with established developers and undertake 12-15 transactions of ₹60–80 crore each.
MORE till date has invested in real estate sector through four real estate funds and other modes, has more than ₹3,700 crore of an Assets Under Management.
Strong Recovery
“With NBFCs putting brakes on new lending and banks becoming selective, there has been a huge gap in construction finance available in the sector over the last two years. In the last six months following the nationwide lockdown, we have seen a strong recovery in demand fuelled by multi-decade low mortgage rates, 5-year stagnated prices, reducing demand-supply gap in inventory, Government support through stamp duty reductions and the genuine need of staying in an owned home during the COVID pandemic,” the MORE Director and CEO, Sharad Mittal, said.
“These factors will lead to a resurgence in residential demand over the next few years. We believe that this is an opportune time to launch our next fund which will focus on construction finance and post-approval funding,” he added.
MORE is part of MOPE, which is the alternative investments platform of Motilal Oswal Financial Services Ltd. The cumulative AUM under MOPE is more than ₹7,000 crore.
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