Motilal Oswal Real Estate raises Rs 575 crore fund; to deploy in affordable housing

Motilal Oswal Real Estate (MORE) Monday said it has raised Rs 575 crore for its fourth realty fund and the amount will be invested mainly in housing projects across six major cities.

MORE is part of Motilal Oswal Private Equity, which is the alternative investments platform of Motilal Oswal Group. The total assets under management (AUM) under Motilal Oswal Private Equity is more than Rs 5,000 crore.

MORE announced the first close of India Realty Excellence Fund IV (IREF IV), its fourth real estate fund.

"The fund has raised commitments aggregating to Rs 575 crore," the company said in a statement.

The amount has been raised from high net worth individuals (HNIs) and family offices. The fund is set up as an alternative investment fund (AIF Category II).

MORE would deploy the capital in mid-income/affordable residential projects across the top six cities in India while selectively investing in commercial projects, it added.

IREF IV would focus on early stage structured equity/structured debt investments with established developers and undertake 12-15 transactions of Rs 80?150 crore each.

"We have raised Rs 575 crore for the fund within three months of launch and we would like to thank our investors for reposing faith in our investment capability. In this fund, we have also witnessed repeat commitments from many existing investors from our previous funds," said Sharad Mittal, Director & CEO of MORE.

Mittal said there is an early sign of a recovery in the housing segment, helped by the new realty law RERA and the government's schemes to boost affordable housing.

"Nearly 75 per cent of the new units launched are priced under Rs 75 lakh while apartment sizes over the years have fallen by over 12 per cent showing the developer's affinity towards affordable housing.

"While sales are showing modest improvement, prices in all major cities are still stagnant or trending downwards as developers endeavour to address the inventory overhang. All these factors indicate early signs of a volume-based recovery in residential real estate," he added,

MORE till date has invested capital in the real estate sector through three real estate funds and PMS/Prop investments.

"Today, cumulative AUM under MORE stands at more than Rs 2,100 crore spread across IREF (Rs 200 crore), IREF II (Rs 500 crore), IREF III (Rs 1030 crore) and balance under PMS/Prop Investments.
Under this strict RERA regime, Mittal said the small sized developers have found the task of completing their stalled projects very daunting.

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"This has manifested into a huge opportunity for large and organised players as these small developers will eventually sell their projects at distressed valuations. These are the opportunities where we believe our kind of capital will be required by the established players going forward," he added.

MORE had earlier funded many developers like Casagrand Group ? 6 investments (Chennai), ATS Infrastructure ? 5 investments (Delhi-NCR), Rajesh Lifespaces ? 3 investments (Mumbai) and Shriram Properties ? 2 investments (Bangalore).

"We have a strong pipeline of deals for our fourth fund and plan to make our first investment in the month of September," Mittal said.