Piramal ties up with IIFL to launch Rs 2000-crore AIF for realty projects

The Piramal Group said on Wednesday it had partnered with IIFL Wealth Management to launch a Rs 2,000-crore alternative investment fund (AIF) to provide last-mile funding to real estate developers. The group said the fund would be used to provide capital to tier-1 developers in key markets. 

The announcement comes close on the heels of SBICAP Ventures achieving the first closure of its Special Window for Affordable and Mid-income Housing (SWAMIH) investment fund I at Rs 10,530 crore. SWAMIH fund was recently announced by Finance Minister Nirmala Sitharaman for stalled housing projects with a total corpus of Rs 25,000 crore.

Recently, the Edelweiss Group had launched a $425-million financing platform and forged a partnership with South Korean firm Meritz Financial Group for buying out existing residential real estate loans and provide completion financing to developers.

Interestingly, Wednesday’s announcement marks Piramal’s return to fund structures, which it once avoided to focus on tie-ups with global funds. It has tied up with CPPIB, and Ivanhoé Cambridge, among others. According to reports, it also did first closing of its structured debt fund recently.

Khushru Jijina, managing director, Piramal Capital & Housing Finance, said, “The creation of this AIF is in line with Piramal Group’s strategy to build newer platforms for co-lending with liked-minded reputed institutions. We will initially seed the fund with existing loans from Piramal Group’s portfolio, while continuing to explore quality deals from the market.” 

With this, Piramal would also be facilitating external capital (on a fund or co-investment basis) alongside its lending business. This would enable the Piramal Group to continue to grow the lending business through a new co-investment/co-origination model, Jijina said. Karan Bhagat, founder, MD and CEO, IIFL Wealth Management, said, “Piramal’s domain expertise in real estate and IIFL Wealth’s ability to seize the best market opportunities have resulted in well-structured investment idea, which will provide clients an ideal risk-adjusted return.” 

IIFL Asset Management has raised asset base of Rs 7,000 crore across eight real estate funds, till date. Of this, it has fully exited first two funds, generating gross internal returns of 18-22 per cent.