Motilal Oswal Real Estate (MORE), the real estate arm of Motilal Oswal Private Equity, has made the first close of its second real estate dedicated private equity fund at Rs 225 crore ($36 million), the company announced. The fund is looking to raise Rs 500 crore, including a green-shoe option of Rs 200 crore.
VCCircle was the first to report in December that the fund is planning to mark its first close at around Rs 200 crore.
The fund called the India Realty Excellence Fund II LLP was launched in November 2013 and it aims to capitalise on the opportunities by focusing on mezzanine debt transactions, which provide regular income through fixed coupon and a subsequent project link upside. It is targeting an IRR of 25 per cent.
It will chase deals in residential sector in top five cities—Mumbai, Delhi NCR, Bangalore, Pune and Chennai.
Sharad Mittal, director & head of Real Estate Investments of Motilal Oswal Real Estate, said, “We are glad with the response we have received for the fund. We believe that next 12-18 months will be an interesting period for doing mezzanine transactions. We are currently evaluating a few opportunities in line with our strategy and are in the process of concluding them.â€
In June last year Mittal was hired from ICICI Prudential PMS to head the realty fund of the firm.
The second fund comes on the back of the success of the first one, India Realty Excellence Fund (IREF) under which it raised Rs 200 crore four years ago. This is totally invested and the firm is looking at exiting some of the portfolios. It had struck deals with average investment size per project of Rs 20-30 crore.
IREF has invested in seven projects in Mumbai, Pune and Bangalore with developers like Godrej Properties, Supreme Universal, etc. Within 12 months from the end of the investment period, IREF has returned around 60 per cent of the total capital commitment.
(Edited by Joby Puthuparampil Johnson)