DELHI: Motilal Oswal Real Estate, the real estate arm of Motilal Oswal Private Equity has made the first close of its second real estate fund - India Realty Excellence Fund II - at Rs 225 crore, the blue-chip private equity firm announced on Wednesday.
The real estate fund - IREF II - has a target corpus of Rs 300 crore, with a green-shoe option of Rs 200 crore. It will largely focus on mezzanine debt transactions, which will provide regular income through fixed coupon and a subsequent project linked upside.
"We are glad with the response we have received for the Fund. We believe that next 12 to 18 months is an interesting period for doing mezzanine transactions," said Sharad Mittal, director and head, real estate investments at Motilal OswalBSE 3.95 % Real Estate.
According to a press statement released by Motilal Oswal Real Estate, IREF II will focus on the residential sector in the country's top five cities, a list that includes, Mumbai Metropolitan Region, National Capital Region, Bangalore, Pune and Chennai, and will partner with developers having proven track record.
"We are currently evaluating few opportunities in line with our strategy and are in the process of concluding them," Mittal was quoted as saying in the press release.
Mittal was hired from ICICI Prudential in 2013, to spearhead the PE firm's real estate investment initiatives.
ET was the first to report Motilal Oswal's plans for second residential-focused real-estate private equity fund in October 2012.
IREF II is preceded by Motilal Oswal's maiden real estate fund - the Rs 200 crore IREF I - which was raised in 2008, and has invested in seven projects across Mumbai, Pune and Bangalore with developers, including, Godrej PropertiesBSE 0.91 %, Supreme Universal, among others.
According to press statement, IREF I has returned about 60% of its total capital commitment, within 12 months from the end of the investment period.
Separately, Motilal Oswal PE also operates two sector-agnostic growth capital funds - the $125 million (Rs 550 crore) India Business Excellence Fund-I (IBEF I) and the $155 million (Rs 950 crore) India Business Excellence Fund-II (IBEF II.)
IBEF I, a sector-agnostic investment vehicle, invests between $5 million (Rs 30.9 crore) and $15 million (Rs 92.7 crore) in mid-market companies, across sectors, such as, food processing, bulk packaging, power transformers, power infra enablers, EPC and engineering goods, among others.
IBEF II typically invests in the range of $8 million (Rs 49.5 crore) to $15 million (Rs 92.7 crore), and has made two investments till date.