Integrow Asset Management to raise Rs 1,000 crore real estate fund

Integrow Asset Management is looking to raise around Rs 1,000 crore in Category II Alternate Investment Fund (AIF) to provide last-mile funding to real estate projects.

The Mumbai-based real estate-focused alternate asset management firm will raise the fund, including a green-shoe option, in India from institutional investors, family offices and high net-worth individuals (HNIs), a top executive said.

“The initial response from target investors for the proposed fund has been encouraging as the investment theme is apt as well as well-timed,” said Ramashraya Yadav, CEO of Integrow Asset Management.

Integrow received capital market regulator Sebi’s approval for the fund last week and the entire fund raising is expected to take six months, he said.

In the backdrop of disruption caused by the Covid-19 pandemic, the fund will be investing in emerging themes in the sector including special situations, land acquisition, and community development through co-living, and co-working. It will also invest in green buildings and environmental, social and governance (ESG)-related initiatives in the real estate sector.

“Post the Covid-19 outbreak, the real estate sector has been undergoing a paradigm shift in the way the capital structures are emerging and evolving hereafter,” Yadav said.

Integrow will also offer completion financing through this new fund in inventory-backed securities of developers with projects in key property markets.

The firm is looking at raising multiple funds through its platform and is working on a plan to raise an apartment fund soon apart from a separate construction financing fund.

Integrow already has a team of 20 officials including seven veterans from the real estate and financing sphere.

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Apart from Yadav, the team includes Jayesh Kariya who was a partner at KPMG, Rahul Somani who has joined from Tata Realty, public market expert Srikanth Iyengar, and Abhijit Das who has joined from IDBI.

The fund intends to capitalise on this opportunity by providing capital to real estate developers to support their established project with stress or last-mile financing to complete projects, based on the quality of the development, visibility of execution and ability to vet and validate project and pricing assumptions, officials said.

Initially, it will focus on projects and investments in Mumbai Metropolitan Region (MMR) and Pune. However, on a case-to-case basis subject to internal approvals, it may consider selective investment in other regions.

The inventory to be considered for the investment will constitute complete or near to complete residential or commercial real estate units which have monetizable value.

Institutional investors have continued to show interest in Indian real estate market in 2020 with a total capital inflow of $5 billion, which is equivalent to over 90% transactions witnessed in the previous year, despite a sudden halt brought on by the Covid19 pandemic, showed a recent report.

Institutional investors have been forming alliances with Indian developers for real estate developments in the country.

The uncertainty over income and yield stability of commercial properties due to the pandemic had led to pull back in investments. However, large global funds have rather used this as an opportunity to negotiate portfolio deals with developers who offered quality rent yielding assets in cities with a high-quality tenant profile.

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