(#7221) South Asia, $150m, fund: RE fund looking to setup fund for office space and affordable housing

About the Firm:

  • Over 15 real estate projects successfully exited in India
  • Avg Gross IRR (Pre Tax): 35% (past 21 deals) *not indicative of future performance*

Real Estate Market in India:

  • Projected to reach $1T by 2030. 
  • Financial institutions have real estate funds focused on the India market
  • The government of India has allowed 100% foreign direct investment into its property market.

Investment Focus (fund only):   

  • Type: Class A office space, Retail, Affordable Housing & Plots
  • Geographic Focus: India
  • Industry Focus: Real estate

Key Terms:
Target Fund Size:
$100M with $150M hard cap
Hurdle Rate:
10% IRR (Pre Tax)
Target Returns:
24%-33% IRR (Gross)
Fund Structure:
Closed end
G.P. Commitment:
3% of committed capital upto $5M
Tenure of Fund:
8 years from final closing date (extendable by 1 + 1 years)
Investment Period:
3 years from final closing date (extendable by 1 year)

Distribution:

  • Return of capital (at the end of the term or after extensions)
  • 10% preferred return
  • 20% of all annualized profits (G.P. catch up)
  • 80% L.P / 20% G.P.

Leverage: Up to 65% at project level

Key Drivers: 

  • Market expected to grow at a CAGR of ~12% over next 7–8 years
  • Existing urban housing shortage of 10 million homes
  • Urban population in India is expected to be about 600 million by 2031
  • Return of non-resident Indians and high networth individuals
  • Rise in disposable income
  • Rapid growth in the service sector
  • Rising demand from Multinational corporations
  • Demand for office space for Tier-II cities