Piramal Group, IIFL Wealth Create Rs 2,000 Crore Real Estate Fund
Piramal Group and IIFL Wealth Management Ltd. on Wednesday said they have set up Rs 2,000 crore corpus for last-mile funding in real estate projects across major cities.
Piramal and IIFL Wealth Management announced a "co-investment on an Alternative Investment Fund platform to fund select advance stage/last-mile real estate projects across Tier-I cities in India". This realty fund, with a target size of Rs 2,000 crore, will be used to provide capital to Tier-I developers in key markets, the firm said in a statement.
India’s real estate sector is facing multi-year slowdown, especially in housing segment. Developers are cash-starved following the liquidity crisis in the shadow-banking sector, which has been a major source of funding for builders in the last few years.
"The market today presents many opportunities for last-mile finance across projects that require a minimum amount of gap funding for completion," the statement said.
Piramal Group is engaged in primary development as well as wholesale funding in real estate. It also has a fiduciary fund management business across multiple funds and mandates across structured, preferred and pure equity.
IIFL Wealth is one of the leading wealth managers in the country, with Rs 1,70,000 crore in assets under management, advice and distribution. It has more than 950 employees present across six global financial hubs and 23 locations in India.
"The creation of this AIF is in line with Piramal Group's strategy to build newer platforms for co-lending with like-minded reputed institutions,” said Khushru Jijina, managing director at Piramal Capital & Housing Finance Ltd. “We will initially seed the fund with existing loans from Piramal Group's portfolio, while continuing to explore quality deals from the market in future.”
With this, Piramal will also be facilitating external capital (on a fund or co-investment basis) alongside its lending business. This will enable Piramal Group to continue to further grow the lending business through a new co-investment/co-origination model.
"Piramal's deep 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,” said Karan Bhagat, founder and managing director and chief executive officer at IIFL Wealth Management.
IIFL Asset Management has till date raised cumulative AUM of around Rs 7,000 crore across eight real estate funds. Of this, it has fully exited first two funds, generating gross internal rate of returns of 18-22 percent.
The Piramal Group, led by Ajay Piramal, has presence in industries such as healthcare, financial services, healthcare information management, glass packaging and real estate. Valued at around $7.3 billion, with operations in 30 countries and brand presence in over 100 markets, the group's turnover is $2.2 billion in 2018-19.