Motilal Oswal Alternates, the alternative investments arm of Motilal Oswal Group, is planning to raise over Rs 2,000 crore through its sixth real estate fund, India Realty Excellence Fund VI (IREF VI), to invest in the top seven cities of India.
The fund plans to deploy the capital in mid-income and affordable housing projects across Mumbai, Delhi-NCR, Pune, Bengaluru, Chennai, Hyderabad and Ahmedabad, while selectively investing in commercial projects as well.
IREF VI, to be set up as an Alternate Investment Fund (AIF) Category II, will focus on structured mezzanine and equity investments with established developers with execution track records and undertake over 25 transactions of Rs 75 crore each.
Motilal Oswal Alternates (MO Alternates) is currently awaiting the Securities & Exchange Board of India’s approval for the same and expects to start the fund-raising process in the next few months.
“Amidst increased volatility in the stock markets, inflationary pressures, rising mortgage rates, and geopolitical tensions, the real estate market in India has remained resilient,” said Sharad Mittal, CEO of real estate funds at MO Alternates. “Multiple factors, like increasing affordability and the increased emotional value placed on home ownership, have led to strong housing sales during the last two years. We believe that strong fundamental factors combined with government initiatives will drive housing demand even higher in the near future.”
Currently, MO Alternates manages five real estate funds and multiple standalone NCD investments. Its cumulative assets under management (AUM) for real estate stand at over Rs 5,500 crore. In real estate, MO Alternates has made more than 100 investments across over 135 projects and secured 50 complete exits.
In the first half of 2022-23, MO Alternates has cumulatively invested over Rs 1,150 crore through its platform across residential and commercial projects in Mumbai, Bengaluru, Chennai, Hyderabad, and Delhi-NCR.
MO Alternates has also secured eight profitable exits worth Rs 450 crore through this platform in the last six months.
“There has been increased deal flow over the past two years. While we have committed more than Rs 1,150 crore in the past six months, we have remained cautious and continue to operate within our investment framework. Our successful exits over the past six months are a testament to our investment philosophy and hands-on asset management,” Mittal said.
This year, the fund has invested in the projects of Casagrand Group and Arihant Group in Chennai, M3M and Smartworld Group in Delhi-NCR, Marathon Group in Mumbai, Puravankara Group, Casagrand Group, Alliance Group and Pacifica Group in Bengaluru, and Honer Homes and Alliance Group in Hyderabad.
These real estate projects are a mix of villa and apartment projects in the affordable and mid-income housing segment across these cities. It has also invested in a couple of commercial projects through this platform.
According to Mittal, in addition to the amounts already committed, MO Alternates plans to commit an additional Rs 1,200 crore to Rs 1,400 crore in the current financial year.
MO Alternates’ second real estate fund, IREF II, worth Rs 489 crore that achieved its final close in 2015, has till date made 14 investments and secured 11 exits at an investment level return of 21.2%. The fund has returned 135% of the money to its investors.
Its third real estate fund, worth Rs 1,031 crore, which achieved its final close in 2017, has till date made 26 investments and secured 14 exits at an IRR of 21%. The fund has returned 93% of the money to its investors.
Its fourth real estate fund of Rs 1,148 crore, which achieved its final close in 2020, is currently under deployment and has, to date, made 26 investments and secured 10 exits at an investment level IRR of 20.5%. The fund has returned over 23% of the money to its investors.
The fifth real estate fund, worth Rs 1,215 crore, which achieved its final close in 2021, is currently under deployment and has, to date, made 13 investments and secured one exit at an IRR of 20.3%.