Realty bailout fund
Piramal Group and IIFL Wealth Management on Wednesday said they have set up a Rs 2,000-crore corpus for last-mile funding in real estate projects in major cities.
Piramal and IIFL Wealth Management announced a “co-investment on an alternative investment fund (AIF) platform to fund select advance stage /last-mile real estate projects across Tier-1 cities in India”.
This AIF with a target size of Rs 2,000 crore will be used to provide capital to tier-I developers in key markets, the company said in a statement.
The real estate sector is facing a multi-year slowdown, especially in the housing segment, and developers are cash-starved following a liquidity crisis in non-banking finance companies, which have 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 has aggregate assets of Rs 1,70,000 crore under its management, advice and distribution. It has more than 950 employees and a presence in six major global financial hubs and 23 locations in India.
“We will seed the fund with existing loans from Piramal Group, while continuing to explore quality deals from the market,” said Khushru Jijina, managing director, Piramal Capital & Housing Finance.
Karan Bhagat, MD & CEO of IIFL Wealth Management, said: “This is a well-structured investment idea which will provide clients an ideal risk-adjusted return”.