Motilal Oswal Real Estate (MORE), the real estate wing of Motilal Oswal Private Equity (MOPE), has raised over Rs 1,000 cr for its third real estate fund meant for investment in structured debt and mezzanine transactions across the six top Indian cities.
IREF III has already committed around 70% of its capital across total 12 transactions in these markets and is likely to be fully committed by the end of current financial year, people close to the development said.
MORE has till date invested in the sector through three real estate funds. Along with non-convertible debentures (NCDs) and proprietary investments, its cumulative assets under management are currently over Rs 2,000 cr. It raised Rs 200 cr under IREF in 2009-10 and Rs 500 cr under IREF II in April 2015 and has now achieved final closure for third fund.
“We have already retuned 43% capital from our second fund with average investment level IRR (internal rate of return) of 24% and this performance has helped us in robust response for third fund. Most of the investors in our third fund are family offices and high net worth investors (HNIs) and several of them are our repeat investors from second fund,“ said Sharad Mittal, head, real estate funds at MORE.
The second fund of MORE, IREF II has till date made 13 investments and secured four complete exits. In the current financial year, MORE is looking to invest Rs 1,000 cr in both residential and commercial projects. The fund is currently negotiating more transactions and has a healthy pipeline of deals, he added.
The fund's investment strategy is based on making early-stage investments in established micromarkets on projects of developers with good track record of execution. As part of this, MORE has made repeat investments in projects, including six investments in Chennai's Casa Grande, four in DelhiNCR-based ATS Group, three investments in Bangalore's Shriram Properties, and three investments in Mumbai's Rajesh Lifespaces. For investments made in the last four years, the fund has focused on mid-income housing with prices ranging between Rs 4,000 sqft and 6,500 per sqft.
Motilal Oswal Real Estate Investment Advisors was founded in 2008 as a 100% subsidiary of MOPE Investment Advisors, the Private Equity wing of Motilal Oswal Financial Services (MOFSL). Mittal is of view that consolidation in real estate is inevitable post implementation of the Real Estate (Regulation & Development) Act, 2016, and the Goods & Services tax.