Subhash Bedi-led real estate investment firm Rising Straits Capital has set up a non-banking financial company (NBFC) to invest in sectors such real estate, hospitality, logistics and healthcare.
Mint reported that the firm has acquired an existing NBFC and is out to raise $100 million to infuse capital in the firm. Christened as Rising Straits Finance Co. Pvt. Ltd, it is expected to start deploying capital from the first half 2017.
“Traditional banking channels are unable to fill the funding gap in the sector today, which is why so many NBFCs are coming up. NBFCs are stepping in to address those gaps,†the report quoted Subhash Bedi, chairman and managing director, Rising Straits Capital.
Bedi said the NBFC will take off with $100-150 million which will be increased to $300 million for investment across these sectors.
The investment platform is also separately raising an offshore fund through a managed account structure. “So far, we have got commitment of around $300 million. We will be investing in both residential and office projects, that are in early stage or under construction,†the report quoted Bedi.
Spokesperson for Rising Straits was not immediately available for comments.
Late last year, in an interaction with VCCircle, Kalyan Chakrabarti, managing director, Rising Straits Capital, had said the firm is following a three-pronged strategy to build its new business. It is looking to repatriate money back to limited partners (or LPs, who invest in PE funds), invest afresh on a project-to-project basis and enhance brand visibility.
On fresh investments, the firm had said it was planning investments in real estate opportunities on a project-to-project basis through a managed account structure.
“We are reaching out to a fresh set of LPs to raise funds, apart from the existing investor base, with a hope to cash in on the positive developments and announcements at the macroeconomic level,†Chakravarty had said.
The NBFC marks a new investment avenue for Rising Straits and comes at a time when a lot of private equity firms focused on real estate have ventured into this space. As first reported by VCCircle, financial services group ASK is in the process of floating an NBFC for exposure in the real estate market. Real estate PE firm IDFC Alternatives is also planning to set up an NBFC for investments in the sector.
Given the state of affairs, NBFCs along with PE firms that invest through debt instruments have turned out to be crucial sources of funding for the sector. Slow cash flow sales have forced developers to rely heavily on debt for refinancing and construction work. Overdependence on debt has led to a situation where financial institutions are chasing the same set of developers.
NBFCs focused on real estate, as result, have added new sectors to their investment horizon to diversify focus. Xander Finance, the NBFC arm of Xander Group, recently added sectors such as education, healthcare and agriculture in an attempt to broaden its portfolio.
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