Motilal Oswal Real Estate commits to commit to 1,000 crore in 2021-22
Bengaluru: Motilal Oswal Real Estate (MORE), the real estate private equity arm of the Motilal Oswal group, announced on Wednesday that it has committed ??1,200 crore in the past 18 months, on residential and commercial projects in Mumbai, Bengaluru, Chennai, Hyderabad and Ahmedabad. He plans to engage ??1,000 crore more in the current fiscal year.
These investments were made 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 in Bengaluru and Phoenix Group in Hyderabad.
The projects are a mix of land, villas and apartments in the affordable to mid-range residential segment. There are also a few commercial office projects in which MORE has invested.
This is also his first investment with Puravankara, Ashwin Sheth Group, Marathon and Pacifica Group. These investments came as a result of a serious liquidity crisis in the real estate market following the IL & FS crisis. This was followed by the pandemic which exacerbated the problem and wreaked havoc in the ordinary course of business, the company said.
“We believe that the current market is in a bull cycle, however, available capital remains scarce to meet growing needs. With our funds, we meet the capital needs throughout the life cycle of the project, ie financing of land and approvals, financing of construction and financing of the last mile, ”said Sharad Mittal, CEO of Motilal Oswal Real Estate.
“As we emerged from the first covid-driven foreclosure in the second quarter of last year, we saw home sales increase due to a mix of factors such as increasing affordability, mortgage rates low over decades and the increased emotional value placed on property during the pandemic. We believe that the fundamentals combined with government initiatives will lead to even higher housing demand in the near future. We also believe that the liquidity scenario will improve in the future and that the real estate sector will receive much needed funding, ”added Mittal.
MORE has also had profitable exits in the past 18 months and has had nine exits worth ??800 crore thanks to its platform.
“With such a dynamic demand atmosphere, there has been an increase in the flow of transactions over the past 12 months. Although we have hired more than ??1,200 crore over the past 18 months we have maintained a conservative approach and have remained true to our investment philosophy. Our successful exits over the past 18 months are the result of this proven investment philosophy and practical asset management, ”said Mittal.
MORE currently manages four real estate funds and its cumulative assets under management (AUM) currently amount to approximately ??5,000 crores.
The fourth fund, IREF IV, which reached its final closure in 2020, is currently being rolled out and has to date made 16 investments and secured 5 exits at an IRR investment level of 20.3%.
IREF V is the fifth fund launched by MORE which has just completed its third closing at ??1,085 crores. It has made five investments to date.
IREF II, which closed definitively in 2015, has to date made 14 investments and secured 11 exits at an IRR investment level of 21.3%. The third fund, IREF III, which closed definitively in 2017, has so far made 26 investments and obtained 10 exits at an IRR investment level of 22.5%.
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