Motilal Oswal's real estate arm to raise Rs 800 crore via fifth fund

The fund has been set up as an alternate investment fund, firm expects to achieve first close by March and conclude fundraising in the next 6-9 months

In one of the biggest fund raising for real estate sector, Motilal Oswal Real Estate (MORE), the real estate private equity arm of Motilal Oswal Financial Services, is looking to raise up to Rs 800 crore through its recently launched fifth real estate fund “India Realty Excellence Fund V (IREF V).”

The fund has been set up as an alternate investment fund (AIF Category II) registered with stock market regulator Sebi. MORE expects to achieve first close by March 2021 and conclude fundraising in the next 6-9 months.

While the earlier three funds focused on early-stage investments, IREF V would focus on construction finance in post-approval projects. The Fund plans to deploy the capital in mid-income/ affordable residential projects across the top 7 cities in India (Mumbai, Delhi-NCR, Pune, Bengaluru, Chennai, Hyderabad and Ahmedabad) while selectively investing in commercial projects. IREF V would focus on structured debt investments with established developers and undertake 12-15 transactions of Rs. 60 – 80 crore each, said Sharad Mittal, Director & CEO of MORE.

MORE till date has invested capital in the real estate sector through four real estate funds and PMS/ NCD investments. Currently, cumulative AUM under MORE stands at more than Rs. 3,700 crore across four funds and investments. 

Vishal Tulsyan, MD & CEO, Motilal Oswal Private Equity said “Our real estate private equity business has scaled up over the last decade. We believe that the sector is undergoing a structural shift and is at the cusp of a transformation. We will continue to grow our presence in this space through value investing over the coming years.”

Mittal said “The last few years have been challenging for the industry, which has been grappling with a prolonged slump due to the impact of regulatory reforms and the liquidity crisis created by IL&FS starting September 2018. With NBFCs putting brakes on new lending and banks becoming selective, there has been a huge gap in construction finance available in the sector over the last two years. In the last six months following the nationwide lockdown, we have seen a strong recovery in demand fuelled by multi-decade low mortgage rates, five-year stagnated prices, reducing demand-supply gap in inventory, Government support through stamp duty reductions and the genuine need of staying in an owned home during the COVID pandemic. These factors will lead to a resurgence in residential demand over the next few years. We believe that this is an opportune time to launch our next fund which will focus on construction finance and post-approval funding.”