Motilal Oswal Real Estate, the real estate private equity arm of Motilal Oswal Group, has made over Rs 525 crore of exits across seven investments through its India Realty Excellence Fund II and India Realty Excellence Fund III.
These exits have been made in projects of developers such as Casagrand Builders in Chennai, ATS Group in NCR, ShriramProperties in Bengaluru and Rajesh Lifespaces in Mumbai, with an average internal rate of return of 21%.
“Our strategy has always been to partner with established developers in top six cities and invest in their affordable or mid-income housingNSE -0.58 % projects through different structures including equity and mezzanine by providing capital at the right stage,” Sharad Mittal, director & CEO at Motilal Oswal Real Estate, told ET. “These exits, which have come at such a difficult cycle for the realty sector, lend credence to our investment strategy and robust underwriting and asset management process.”
The real estate sector has been grappling with liquidity woes following the IL&FS crisis. Fresh disbursements by NBFCs and HFCs have slowed down considerably and refinancing of projects has been tough.
“We are also looking at making two more exits in the next couple of months from our second fund, IREF II. With those exits, there shall only be three investments left in the fund, which we would be looking to wind up within a year,” Mittal said.
Motilal Oswal Real Estate had recently announced the second close of its fourth realty fund, IREF IV, at Rs 850 crore. The fund has so far raised commitments of Rs 1,000 crore and would be looking to achieve final close by the end of the year. The fund has made six investments.
The private equity real estate firm’s cumulative assets under management (AUM) are around Rs 3,200 crore across four real estate funds, portfolio management schemes (PMS) and proprietary investments. It has so far made 50 investments through the platform and completely exited 27 investments.
Motilal Oswal Real Estate is part of Motilal Oswal Private Equity, which is the alternative investment platform of Motilal Oswal Group. The cumulative AUM under Motilal Oswal Private Equity are over Rs 7,000 crore.
IREF II is Motilal Oswal Real Estate’s second fund that achieved its final close in April 2015 at Rs 500 crore and has till date made 14 investments. The fund has secured nine exits at an average IRR of 21.3%. It has returned 127% of fund corpus within four years from its final close. The fund has another 30% capital invested across its balance five investments that would be divested over the next two years.
IREF III is the third fund launched by Motilal Oswal Real Estate, which achieved its final close in August 2017 at Rs 1,000 crore and has till date made 22 investments. The fund has secured five exits at an average IRR of 22%. It has returned around 26% of fund corpus within two years from its final close.