With the demand outlook for middle-income and affordable houses expected to stay strong, Motilal Oswal Alternates (MO Alts), the alternative investment arm of Motilal Oswal Financial Services Ltd, has closed the first two transactions from its new real estate fund with cumulative investments of ₹190 crore, two company executives told Mint.
The company has committed ₹100 crore to Chennai-based Radiance Realty Developers India Ltd, and another ₹90 crore to Pune-based Mantra Properties and Developers Pvt. Ltd, for their respective residential projects.
Both the investments are early-stage bets by MO Alts, where the developers aim to utilise the capital to acquire land, on which they intend to develop residential projects.
Building a corpus
In August last year, MO Alts had said it will raise ₹2,000 crore via its sixth real estate fund, India Realty Excellence Fund VI (IREF VI). The fund is strategically focussed on early-stage investments in predominantly middle income and affordable residential projects across the top eight cities—Mumbai Metropolitan Region, Delhi-National Capital Region, Pune, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad.
The company had achieved the first close of its new fund at ₹1,274 crore, in February this year. “Since the first close, we have received additional commitments of ₹300 crore. MO Alts is targeting to achieve final close of ₹2,000 crore in 2024,” Anand Lakhotia, co-head of real estate, MO Alts, told Mint.
“The improvement of connectivity between various micro-markets through major infrastructure developments will create new hubs of growth within each city. There is a strong demand across all segments of the market, from mid-range properties to luxury residences,” Lakhotia added.
Till date, MO Alts has invested capital in the property sector through five real estate funds. It also manages other standalone and proprietary investments in the real estate space.
Looking for returns
Significantly, MO Alts made 15 investments in 2023-24, with a commitment of ₹1,016 crore, while it exited 23 investments with a capital of ₹1,102 crore during the same period.
The real estate sector has seen a sharp turnaround in the aftermath of the pandemic. With the revival in demand from home buyers fuelling a rise in residential sales, developers have also been emboldened to shop for land parcels.
As a strategy for the new sixth fund, MO Alts plans to continue funding developers to acquire land for residential projects. “Developers are bolstering their supply pipeline through substantial investments in land acquisition nationwide. We anticipate land transactions to remain stable, driven by developers expanding their land banks amidst anticipated interest rate moderation, increasing housing demand, and support from institutional funding agencies,” said Saurabh Rathi, co-head of real estate, MO Alts.
The company has also signed term sheets for five other transactions, to invest around ₹600 crore, which are currently under various stages of due diligence.
