ASK Property Investment Advisors (ASK PIA), the real estate private equity (PE) arm of financial services company ASK Group, has announced the first close of its ₹2,000-crore real estate fund. So far, the firm has raised about ₹4,500 crore through seven domestic funds and has returned about ₹1,000 crore to investors at multiples of 2 times.

On the NBFC front, ASK PIA will take small steps as it did with PE, said Amit Bhagat, a founding member of ASK PIA. Bhagat, who is now the company’s MD and CEO, told BusinessLine in an interview that the NBFC will reach ₹500 crore in three-five years. Excerpts:

ASK Group recently entered the commercial real estate space, with a ₹200-crore investment in ATS Infrastructure’s mixed land use project in Noida. What was behind the foray?

The first was the advent of Real Estate Investment Trust (REIT) regulations and removal of all impediments which were making it difficult for REIT to become a reality. We thought it was the right time to enter the commercial space. Because ‘Grade A’ commercial space in our country is not actually as per international standards.

When our economy takes off, the commercial space requirement is definitely going to be an attractive preposition. We decided not to enter into brownfield, which is completed assets, but move into greenfield (taking completion risks). Here, you have to construct the project with bank funding and lease it, and then go in for REITs. So we follow the greenfield mode with good partners with execution capability and acquirer relationships (relationships with tenants).

Is ASK Group planning to launch an NBFC soon? Is this a bid to diversify your portfolio?

We will take small steps as we did with the PE scheme. We want to be relevant to developers by being providers of capital through all modes, as equity is only provided by a handful of players. We will remain a mid-tier NBFC, and will focus on the quality of the borrower. So, we will be able to offer equity and provide the developer with a small portion of debt. We will be a mid-tier NBFC. We have done controlled investments and would like to maintain the same risk management and quality of partners selection or borrowers selection. Our board has already announced that we will start with a ₹100-crore capital and go up to ₹500 crore, and I think it will be a three-five year journey for us to reach ₹500 crore.

On Monday, ASK Property raised ₹535 crore through its seventh domestic real estate fund...

This is a ₹2,000-crore fund . We have started raising it, and will start deploying the fund from next quarter onwards. We are raising about ₹1,000 crore from offshore investors and another ₹1,000 crore from the domestic market, and expect to close it in the next quarter. For investments, we will follow the same equity strategy, and will invest in residential, mid-segment and affordable. We will invest the proceeds across Mumbai, Pune, Bengaluru, Chennai, Hyderabad and NCR.

How many exits have you planned for this financial year? What’s your exit strategy and for exits? What is your typical internal rate of return (IRR)?

We do not announce exits in advance but as a policy we will keep on announcing one exit every quarter. Normally, a combination of cash close from the sales and internal accruals combined with refinancing from a bank or an NBFC . Our average IRR is about 20 per cent.

REIT rules have been formalised, but when do we see it kicking off?

You will see REITs being launched in this financial year itself. The regulatory changes sought by the investors and committed by the regulator, everything has been resolved, and we are ready to go.

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