Bengaluru: Motilal Oswal Real Estate , the real estate investment arm of Motilal Oswal Private Equity Advisors Pvt. Ltd (MOPE), has hit a pause on investments and decided to wait and watch, given the uncertainty of the current situation owing to the covid-19 crisis, said a top executive.
MOPE has made a final close of its Indian Realty Excellence Fund or IREF-IV at ₹1150 crore. It has already committed ₹550 crore across nine investments in Chennai, Pune, Hyderabad and Ahmedabad from the IREF IV fund.
The fund, which invests in mid-income residential projects and selectively in mid-sized commercial office projects, was launched in mid-2018, largely from high-networth investors and family offices.
The new fund, like those previously, has focused on smaller deals, mainly in the range of ₹40-80 crore each. The investments have been made in projects of developers such as Chennai’s Casagrand Group, Ashoka Builders and Phoenix Group in Hyderabad, and Pune’s Montvert Group.
Along with the remaining capital from the new fund, MOPE has dry powder of around ₹1000 crore to be invested.
“There is absolute uncertainty right now, and the impact on construction will be there for six months. Projects will get delayed because the sites are locked, sales are not happening and repayments may get postponed. We will take our time to invest though there will be demand for capital," said Sharad Mittal, director and head, real estate investment, MOPE.
The real estate sector, which was limping back to normalcy after a prolonged slowdown, which was aggravated by the crisis among non-banking financial companies (NBFCs), is now facing a new crisis with the current lockdown.
Mittal said that MOPE’s strategy to work with established developers in their respective geographies has helped and as of March, all dues have been paid.
“We will focus on asset management now. We have 34 live projects, where we have invested in. I believe that the impact of this crisis will get reduced over a period of time but leveraged developers will be affected more than the rest," he said.
The cumulative assets under management (AUM) of MOPE combining its funds and portfolio management services is around ₹3,600 crore.