Two successful investment funds have facilitated the Kerala based Secura Investment Management (India) Pvt Ltd, the first SEBI registered and Shariah compliant venture capital fund, to come out with a third fund – Realty AIF – with a target to raise ₹200 crore.

The first scheme Secura India Real Estate fund Domestic Scheme 1 has completed with a pay back record of 18 per cent, while the second fund is in the investment stage and its tenure will be over next year.

M.A.Mahaboob, the company’s Managing Director shares with Business Line on the prospects of the fund and its potential to garner a bigger capital pool especially among institutional investors, HNI’s etc in the wake of relaxation of SEBI norms for tapping offshore investors. The primary objective of the fund is to carry out investments as permissible under SEBI regulations and raise resources to provide venture capital assistance to portfolio companies operating in the Indian real estate and allied sectors so as to generate superior risk-adjusted returns.

According to him, funds will be invested in equity modes, quasi-equity and equity related instruments, investment in a co-investment capacity with development companies and other promoters of a portfolio company etc. The minimum investment under the scheme is ₹1 crore which is to be paid in instalments in three years with a down payment of 10 per cent of the capital commitment.

We are looking at an annualised RoI of 15-20 per cent with a profit share post hurdle of 80:20 with catch up, he adds.

Edited excerpts from the interaction:

Why do you focus only on real estate funds rather than other sectors like SME?

The realty and development projects offer more liquidity and we will be able to structure planned and easy divestment in this sector. We have obtained approval from SEBI to invest in real estate sector. At the same time various VC’s are operating and investing in different sectors including SME’s.

How do you look at the prospects of the fund especially among NRI segment?

We are getting good response from various classes of investors due to the legal clearance for NRI investments. We are targeting high net worth individuals from West Asia and other parts of the country.

Why do you prefer Sharia compliant and what would be its benefits? Does it appeal to non-Muslim investors?

There is a vast majority of people, who are interested in Shariah compiled products due to ethical reasons and this investor class has not been properly addressed. We intend to tap this opportunity. The product has potential of higher returns and Secura has distributed 18 per cent returns per annum for the previous fund. This makes the newly launched fund suitable for all class of investors.

How is the prospect of real estate market in your investing region?

The fund is focusing to invest in the southern part of the country where the real estate market has shown more resilience compared with northern and western regions over the past two-three years. As a result, the deal momentum from private equity firms and non-banking finance companies has also been healthy in the region.

South is becoming a hotbed for real estate development, more so compared to the northern and western regions, as the burgeoning IT sector and subsequent urbanising lifestyle continue to attract investments into the region. In addition, the South Indian realty market is more attractive as there is no over supply of residential/commercial units. Compared to north, the issues related to the incomplete projects are very little in south market. Also more units, be it residential, commercial or office spaces, its being consumed by end user in south.

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