Motilal Oswal Real Estate (MORE), the real estate private equity arm of Motilal Oswal Group in the process to invest over Rs 1,000 crore in residential and commercial real estate projects across the country in the next three months.
The private equity firm has already invested over Rs 1,200 crore projects across Mumbai, Bangalore, Chennai, Hyderabad and Ahmedabad through its investment platform post the outbreak of Covid19 pandemic.
These investments have been made in the backdrop of a severe liquidity crunch in the real estate market post the IL&FS crisis. This was followed by the pandemic which aggravated the problem and wreaked havoc in the normal course of business.
“We believe the current market is in an upcycle, however, capital available still remains scarce to meet the growing requirements. Through our funds, we cater to the capital requirement during the entire project lifecycle including land and approval financing, construction finance and last-mile funding,” said Sharad Mittal, CEO of Motilal Oswal Real Estate. “In addition to the amounts already committed, we plan to commit Rs 1,000 crore more during this financial year.”
MORE has invested funds in projects of Casagrand Group and Radiance Realty in Chennai, Ashwin Sheth Group and Marathon Group in Mumbai, Puravankara Group, Shriram Properties, Pacifica Group and Casagrand Group in Bangalore and Phoenix Group in Hyderabad.
The real estate projects are a mix of plotted, villa and apartment projects in the affordable and mid-income residential segment across these cities in addition to a couple of commercial projects in which MORE has invested through this platform.
The private equity fund has also made 9 exits worth Rs 800 crore through this platform over the last 18 months.
“As we emerged out of the first COVID-led lockdown in Q2 last year, we saw housing sales pick up due to a mix of factors like increasing affordability, multi-decade low mortgage rates and the increased emotional value placed on home ownership during the pandemic,” Mittal said.
He believes that fundamental factors combined with government initiatives will drive housing demand even higher in the near future. The liquidity scenario will improve going forward and the realty sector will receive the much-needed funding.
“With such a buoyant demand atmosphere, there has been an increased deal flow over the past 12 months. While we have committed more than Rs 1,200 crore in the past 18 months, we have maintained a cautious approach and stuck to our investment philosophy. Our successful exits over the past 18 months are a result of this tried and tested investment philosophy and hands-on asset management,” Mittal added.
MORE is currently managing four real estate funds and has around Rs 5,000-crore worth assets under management. MORE’s fifth fund IREF V, which has recently achieved its third close at Rs 1,085 crore, has made so far made five investments.
Its second fund, IREF II, which achieved its final close in 2015, has till date made 14 investments and secured 11 exits at an investment level internal rate return (IRR) of 21.3%. The fund has returned around 135% of the money back to its investors.
The private equity firm’s third fund, IREF III that achieved its final close in 2017, has till date made 26 investments and secured 10 exits at an investment level IRR of 22.5%. This fund has returned nearly 67% of the money back to its investors.