Motilal Oswal Real Estate (MORE) has raised close to Rs 1,000 crore for its fourth fund, and is actively seeking opportunities in the mid-market residential projects with large developers, which will include land acquisitions either through structured mezzanine or structured equity. The size of the fourth fund, known as the India Realty Excellence Fund IV, is Rs 1,200 crore which may go up to Rs 1,500 crore.
Sharad Mittal, CEO at MORE, said some of these opportunities are coming through the consolidation of the market where the existing developer, for various reasons, is moving out of the market by selling out to a large developer who is stepping in with MORE’s capital.
“We are looking at Pune, Hyderabad and Bengaluru. We have also started looking at Ahmedabad. That would be a first for us. We want to remain light on Delhi and Mumbai. There are three-four transactions that we are actively looking at and the deployment of funds would be likely done before the end of September this year. The ticket size would be between Rs 70-150 crore. We will close the Hyderabad and Pune transactions soon,” he said.
The projects would include residential and group housing while part of it would be commercial as well. The end product will be priced between Rs 5,000-5,500 per square feet.
Mittal also explained that the fund’s strategy to partner with large developers in mid-market housing in metros other then Mumbai and Delhi has worked well for them.
“We have focused on doing downside protected mezzanine deals. We are not going to do significantly different than what we have done in the last five years. The current environment will lead to change of hands from weaker to larger/stronger developers, and this works well with our strategy,” he said.
The fund is likely to see six to seven more investments by the end of this calendar year, according to Mittal. “We also plan to make exits from our third fund over the next six months,” he said.
The tenor of the fourth fund is five years and is extendable by two more years. Most of the limited partners (LPs) in the fund are high networth individuals (HNIs) and family offices.
So far, the India Realty Excellence Fund IV has made four investments that include Casa Grande in Chennai, Ashoka Builders in Hyderabad, Radiance Realty in Chennai as well as BU Bhandari Landmarks in Pune, according to MORE’s website.