Motilal Oswal Alternates (MO Alts), a part of Motilal Oswal Financial Services, is set to raise Rs 2,000 crore for its sixth real estate fund known as India Realty Excellence Fund VI (IREF VI). This fund aims to support early-stage investments, particularly in the field of real estate development, including providing funds to developers for purchasing land.
IREF VI is primarily focused on investing in mid-income residential projects during their initial stages across eight major cities in India. These cities include Mumbai, Delhi-NCR, Pune, Bengaluru, Chennai, Hyderabad, Kolkata, and Ahmedabad. The fund will also allocate some of its resources toward selected commercial projects.
Vishal Tulsyan, who serves as the Managing Director and CEO of MO Alts, pointed out,
…the real estate industry requires a substantial amount of Rs 2.5 trillion for acquiring land. However, traditional financial institutions like banks, NBFCs (Non-Banking Financial Companies), and HFCs (Housing Finance Companies) are restricted from lending to prevent the formation of risky asset bubbles.
This has created a strong demand among developers for alternative funding sources. Currently, land deals worth up to Rs 1 trillion are taking place in the Indian real estate market, often involving joint ventures or collaborations between developers and landowners. Despite this, many developers are not comfortable with these arrangements and are seeking different options for funding.
Tulsyan mentioned that developers are willing to contribute 10% of their funds, with the remaining funds being sourced from existing investors, High Net Worth Individuals (HNIs), and various institutions.
MO Alternates aims to finalize the fundraising for the IREF VI fund by the end of December this year. Subsequently, the funds will be invested over a span of 18 to 24 months.
Approximately 20-30% of the allocated funds will be utilized in the eight specified cities, while the majority—about 70%—will be channeled into the mid-segment of the residential market.
The fund's approach also includes limiting exposure to each developer to around 15% of the total funds and diversifying investments across multiple projects. Furthermore, the fund intends to support redevelopment projects that have already secured necessary agreements and approvals.
Too Long, Didn’t Read
Motilal Oswal Alternates' India Realty Excellence Fund VI (IREF VI) is in the process of raising Rs 2,000 crore for its sixth real estate fund. This fund will focus on providing early-stage investments for mid-income residential projects in prominent Indian cities, along with select commercial projects.
The demand for such funding arises from developers who are seeking alternatives due to lending restrictions from traditional financial institutions. The fund aims to ensure the responsible deployment of its resources, with a significant portion allocated to specific cities and the mid-segment residential market.
Developers' involvement will be balanced, and the fund is also open to supporting redevelopment projects that have secured necessary agreements and approvals. The fundraising process is targeted to conclude by the end of the year, followed by a gradual investment strategy over the subsequent months.
