Buoyed by the earlier performance, Sundaram Alternates has raised ₹200 crore in the third tranche of its High Yield Secured Real Estate Fund within a month of its launch and targets mopping up ₹700 crore in coming days.

The fund will seek to use its focused and robust credit policy to create risk-adjusted returns and periodically distribute cash to reduce risks and provide a current income model for its investors.

Risk mitigation strategies

Karthik Athreya, Head of Strategy, Alternate Credit, said the funds have significant risk mitigation strategies that are differentiated in the market in terms of underwriting methods and diligence focus.

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Vijayendiran R, CEO of Sundaram Alternates, said "The real estate space is exhibiting growth — sales numbers reaching pre-Covid levels, prices remain in line in the company’s key markets and supply is managed. The growth is aided by the low interest rates offered by banks, attractive pricing, and incentives offered by developers."

ESG compliance

Harsha Viji, Executive Vice-Chairman, Sundaram Finance, added, “Our focus across various investment strategies, going forward, is to also transition our portfolio into ESG compliance over the next few years, reflecting the strong vision of Sundaram Group as a responsible corporate citizen.”

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The third series of AIF Cat II funds will invest in senior secured credit of real estate developers based out of South India. Fund III follows the better performance of the earlier two similar funds that raised over ₹840 crore and built a diversified asset book of 18 investments to date that are generating 18-20 per cent gross IRRs.