PE firm Avenue Venture invests Rs 40cr in Vastushodh's affordable housing project

Vastushodh to launch affordable housing project in Boisar Mumbai

Pune-based Vastushodh Projects today announced that it has received funding of Rs  40 crore for two of its affordable housing projects from PE firm Avenue Venture Partners Real Estate Fund.  

The Mumbai-based PE firm will invest in Vastushodh's affordable housing projects AnandGram, spread over 22 acres plot on Pune-Solapur highway and the rest will be disbursed in a project that is yet to be announced.

The first tranche of the total investment, that is, about Rs  20 crore, has been invested in AnandGram project. The capital raised from Avenue Venture’s has been invested for land procurement and the PE firm will get equity holding of 80 per cent in the project.

“We have been approached by several institutional investors and funds for investment but we decided to go with Avenue Ventures. Though Avenue Ventures has 80 per cent stake in the project they will be invested in the project for 36 months or we buyout them in that period,” said Sachin Kulkarni, MD, Vastushodh Projects.

This is the second investment by a private equity fund in an affordable housing project. In 2011, PE player Carlyle had announced investment of $26 million in Value and Budget Housing Corp set up by Jaithirth (Jerry) Rao and P S Jayakumar.

Vastushodh that focuses on affordable housing segment, has projects in Pune, Kolhapur and Baramati, is also entering Mumbai. The company in a joint venture has acquired 1.1 million square feet of land at Boisar and invested about Rs  10 crore for the same. The company declined to comment on the JV partner for the project.

“Mumbai will be an interesting place. We have already acquired the land and also have the sanctions in place. The project will have 2,500 units and will be in the price range of Rs  500,000 to Rs  30 lakh. And the flats will not be less than 325 sq.ft,” said Kulkarni.  Vastushodh projects come under two brands—AnandGram and UrbanGram—for lower and middle income group customers. AnandGram offers homes in the range of Rs  500,000 to Rs  1,500,000 and UrbanGram flats are available in the range of Rs  15 lakh to Rs  30 lakh. So far Vastushodh has completed construction of 1,700 housing units at multiple locations in Pune and is currently in the process of developing about 7.5 million square feet with over 13,000 units of affordable housing. “We will deliver these homes over the next three to four years,” said Kulkarni.

For Kulkarni, the investment by Avenue Venture is a step closer to its aim of an initial public offering (IPO). “We are in talks with several PE players and as we go forward we may look at raising further funds for our projects. This will be helpful for us as we are aiming for an IPO by 2018-19. This will allow investors to see value in the business,” added Kulkarni.

Avenue Venture Partners was founded in 2012, and earlier this year had raised Rs  250 crore with an aim to invest in residential projects across Pune, Bangalore and Chennai. So far the fund has committed its entire corpus over eight transactions spread across these three cities. In September it had announced an investment of Rs  55 crore in Pune-based Rohan Builder’s project in Bangalore.