Motilal Oswal Alternates (“MO Alts”), the alternative investments arm of Motilal Oswal Financial Services Limited is set to raise up to Rs 2,000 Cr through its recently launched sixth real estate fund “India Realty Excellence Fund VI (IREF VI).” Building on the success of its previous real estate funds, MO Alts is further strengthening its presence in the real estate sector with a focus on early-stage investments.
MO Alts, till date, has invested capital in the real estate sector through five real estate funds. The Firm also manages other standalone and proprietary investments. MO Alts is a seasoned real estate manager and has till date undertaken more than 140 transactions and funded ~ Rs. 7,500 Cr across 50 developers in India. They have also successfully exited more than 70 transactions and generated an IRR of more than 20% in these exits.
IREF VI will strategically focus on early-stage investments in mid-income/affordable residential projects across India's top 8 cities, including Mumbai, Delhi-NCR, Pune, Bangalore, Chennai, Hyderabad, Kolkata and Ahmedabad. Additionally, selective investments in commercial projects will be pursued.
The Fund has been set up as an alternate investment fund (AIF Category II) registered with stock market regulator SEBI. MO Alts expects to achieve first close by December 2023 and complete the fund-raising process within the following 6-9 months.
MO Alts is the alternative investments platform of Motilal Oswal Financial Services Limited. The cumulative AUM under MO Alts is more than USD 2 billion.
Vishal Tulsyan, MD & CEO, MO Alts said “Over the past decade, our real estate private equity business has experienced significant growth while achieving remarkable milestones. We firmly believe that the real estate sector has undergone a robust structural recovery, underpinned by strong fundamentals, paving the way for a momentum-led growth trajectory. As we enter the next decade, we are incredibly optimistic about the real estate market, foreseeing it as a prime period for growth. With unwavering commitment, we shall continue to strengthen our presence in this dynamic space.”
Saurabh Rathi, Co-Head of real estate funds at MO Alts said “Amidst the global challenges posed by the COVID-19 pandemic, 2022 witnessed a remarkable resurgence worldwide, with India emerging as a pivotal force in the global economy. Despite prevailing global economic slowdowns, our nation's steady domestic consumption and robust macro-economic fundamentals have paved the way for sustained growth. Throughout this period, the Indian real estate market has demonstrated remarkable resilience, remaining buoyant and showing promising signs for the upcoming years. It is this optimism and favorable market outlook that have led us to seize the opportune moment to introduce our next fund. Our focused ground up approach to investing, frugal underwriting and proactive asset management practices have helped us create right levers for next phase of growth in this tail-winded environment for real estate.”
Anand Lakhotia, Co-Head of real estate funds at MO Alts said “Early-stage investments in real estate present a significant opportunity, especially considering the crucial capital requirement developers face at the beginning of a project. With various restrictions on Banks and NBFCs to fund this critical phase, coupled with the promising outlook of the real estate market, our fund is strategically positioned to seize this opportunity.”
“Our investment strategy, evident in our earlier funds, centers around partnering with established developers in their mid-income/affordable housing projects through structured debt. This approach has yielded positive results, particularly with our focus on IT cities, over the past few years, affirming our commitment to delivering strong returns for our investors. Moving forward, we will continue to work closely with our preferred partners and capitalize on our existing successful strategy.”
Speaking to Realty+ on the criteria while selecting developers to invest to avoid any sort of fraudulent dealings they said," We have a clear process while selecting the developers while investing the funds. We check the background of a developer or builder and also their value in the market. What kind of sales is the developer clocking, intent of the developer. We have a team doing the analysis thoroughly before we decided to invest in a particular developer's project. We also check their balance sheet , track records. Atleast 30 to 50 stakeholders who are related to that particular builder is investigated by our team before the finalisation. This is one of the major concerns among the end users of whether the developer is trustworthy or not. We ensure to select such developers who have good record in the market and can deliver the project on time."
