Altico Capital to raise property fund this year

Altico Capital, a non-banking financial company, wants to raise multiple tranches of money for a real estate private equity fund from both domestic and international investors this year.

Altico has been promoted by Clearwater Capital, Abu Dhabi Investment Council and Varde Partners. It does structured debt deals and competes with the likes of HDFC and LIC Housing Finance, beside NBFCs run by Piramal, KKR and Edelweiss, among others, in lending to property developers.

“We have applied for an AIF (alternative investment fund) licence from Sebi (the markets regulator). We are looking to raise funds from investors in the first half of this year,” said Sanjay Grewal, chief executive officer. They aim, he said, to appoint distributors in the next couple of weeks.

“We plan to raise a multiple series of small to medium sized corpus for the real estate fund,” he added.

Piramal Fund Management, a competitor, has stopped raising third-party funds and is looking to focus on proprietory book funding and joint ventures with global pension and sovereign funds. Blackstone, the world’s biggest alternative fund manager, is also looking to enter private debt deals in the country.

NBFCs have, according to a March report by property consultant Knight Frank, gained significant market share over the past two years. They now contribute about 18 per cent of the institutional funding requirement of this sector, from 12 per cent in 2015. In the same period, PE funding has dropped from 61 per cent to 58 per cent.

Altico’s property fund would co-invest with Altico, said Grewal, with the latter investing 80 per cent of the deal amount. “Whatever structured debt deals we used to do from Altico’s balance sheet, we will do the same through the AIF,” he stated.

On whether the promoters of Altico would invest in the real estate fund, he said they had the ability to bring capital when required.

Grewal said Altico would also look at asset classes such as commercial real estate, logistics and warehousing, and education.

This foray into new sectors and the AIF were part of a plan to increase its balance sheet to $2-3 billion (Rs 13,000-19,000 crore) by 2019-20. In FY17, it had doubled its balance sheet size and lent about Rs 3,000 crore, while raising a little over Rs 2,000 crore from various institutions, banks and mutual funds.