This AIF with a target size of Rs 2,000 crore will be used to provide capital to tier-I developers in key markets, the company said in a statement.
Piramal Group and IIFL Wealth Management on Wednesday said they have set up Rs 2,000 crore corpus for last-mile funding in real estate projects across major cities. Piramal and IIFL Wealth Management announced a “co-investment on an Alternative Investment Fund (AIF) platform to fund select advance stage / last-mile real estate projects across Tier-1 cities in India”. This AIF with a target size of Rs 2,000 crore will be used to provide capital to tier-I developers in key markets, the company said in a statement.
Real estate sector is facing multi-year slowdown, especially in housing segment, and developers are cash-starved following liquidity crisis in non-banking finance companies, which have been a major sources of funding for builders in the last few years. “The market today presents many opportunities for last-mile finance across projects that require a minimum amount of gap funding for completion,” the statement said.
Piramal Group is engaged in primary development as well as wholesale funding in real estate. It also has a fiduciary fund management business across multiple funds and mandates across structured, preferred and pure equity. IIFL Wealth is one of the leading wealth managers in the country, with aggregate assets of around Rs 1,70,000 crore under management, advice and distribution. It has more than 950 employees and presence in 6 major global financial hubs and 23 locations in India.
“The creation of this AIF is in line with Piramal Group’s strategy to build newer platforms for co-lending with liked-minded reputed institutions. We will initially seed the fund with existing loans from Piramal Group’s portfolio, while continuing to explore quality deals from the market in future,” said Khushru Jijina, Managing Director, Piramal Capital & Housing Finance Ltd. With this, Piramal will also be facilitating external capital (on a fund or co-investment basis) alongside its lending business. This will enable Piramal Group to continue to further grow the lending business through a new co-investment/co-origination model.
Karan Bhagat, Founder, MD & CEO, IIFL Wealth Management said: “Piramal’s deep domain expertise in real estate and IIFL Wealth’s ability to seize the best market opportunities have resulted in well-structured investment idea which will provide clients an ideal risk-adjusted return”. IIFL Asset Management has raised a cumulative AUM (asset under management) of around Rs 7,000 crore across 8 real estate funds, till date. Of which, it has fully exited first two funds, generating gross IRRs (internal rate of returns) of 18-22 per cent.
Piramal group, led by Ajay Piramal, has presence in industries such as healthcare, financial services, healthcare information management, glass packaging and real estate. Valued at around USD 7.3 billion, with operations in 30 countries and brand presence in over 100 markets, the group’s turnover is USD 2.2 billion in FY2019.