Motilal Oswal Alternates (MO Alts), the alternative investments arm of Motilal Oswal Financial Services, will be raising Rs 2,000 crore for its sixth real estate fund, India Realty Excellence Fund VI (IREF VI). The fund will focus on early-stage investments, including funding developers for land purchases.
IREF VI will focus on early-stage investments in mid-income residential projects across top eight cities — Mumbai, Delhi-NCR, Pune, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad. Selective investments will go to a few commercial projects.
Vishal Tulsyan, MD and CEO, MO Alts, said the realty industry would require Rs 2.5 trillion for land acquisition but banks, NBFCs and HFCs are not allowed to lend to avoid the creation of asset bubbles. So, there was a strong demand from developers for this funding. Land deals worth up to Rs 1 trillion are being traded in the Indian real estate market with developers getting into joint ventures or joint development with land owners.
However, developers are not comfortable with this arrangement and are looking for alternatives, Tulsyan said. They had committed to put in 10% of their own funds with the rest coming from existing investors, HNIs and institutions.
MO Alternates is looking to close the fund by December this year and then deploy the funds over 18-24 months. Around 20-30% of the funds will be deployed in the eight cities. Around 70% of the funds would be deployed in the mid-segment of the residential market. Exposure to each developers would be limited to to around 15% of the funds and across multiple projects. They would also look at funding redevelopment projects where agreements are finalised with all approvals are in place.