Altico Capital, a non-banking finance company (NBFC) promoted by Clearwater Capital, Abu Dhabi Investment Council and Varde Partners, is looking to invest about Rs 2,500 crore every year for the next five years in the Indian real estate market.
In the current financial year, Altico has done 11 deals and is looking at another three to four, which will take its investment to around Rs 2,500 crore, said Sanjay Grewal, its chief executive officer.
Altico lends money for mid-income housing projects in Tier-I cities, through structured senior secured debt.
"In the next two to three years, the real estate sector would need a significant amount of funding. Hence, we will focus on the sector. We might look at other appropriate and compelling sectors and strategies," said Grewal.
Altico's average size is around Rs 150 crore but it would also like to do deals of Rs 200 crore to Rs 300 crore also. "We would want to have a loan book of $1.5 billion by FY20 and $1 billion by FY18," he said.
According to him, the company typically lends to developers with attractive projects through multiple strategies that optimise diversification and minimise sales, approval and execution risks.
Last year, Altico Capital and Piramal Fund Management co-invested about Rs 600 crore, in equal measure, across multiple projects of Bengaluru-based real estate company Century Real Estate Holdings, in one of the largest structured debt transactions.
Altico also lent Rs 450 crore to a joint venture project of Sumer Group and Radius Developers in Mumbai last year.
PE firms turn to realty
Private equity firms have set up a number of real estate-focused NBFCs in the past couple of years that compete.
Piramal Fund Management, Xander NBFC and the NBFC floated by KKR and Singapore sovereign wealth fund GIC are some of the prominent ones in this space. Real estate accounts for 17-20 per cent of their deals. "There is a requirement of $15 billion of funds in real estate every year and scope for everybody," Grewal said.
Altico has seen deals totalling around $7 billion in the past year and has taken proposals of another $1 billion to its investment committee. It is expected to end up doing $350-400 million of deals every year, he said.
Grewal said the company would draw down Rs 450 crore from Washington-based IFC in the current year as equity capital and raise Rs 2,000 crore as debt in FY17. Altico has an equity capital base of Rs 2,000 crore.
Altico could also look at alternative fund structures in the future and was in talks with investors on this, he said.