IIFL raises Rs700 crore, invests in two Mumbai projects (2024)

Mumbai: Financial services firm IIFL Group has raised ₹ 700 crore for its new residential housing fund, the IIFL Real Estate Fund (Domestic) Series II, and has closed the first two transactions in projects in Mumbai, said a top executive.

IIFL, which started raising ₹ 1,000 crore in mid-January, will now raise the remaining capital in the next month or so.

The fund, which focuses on structured debt transactions, comprises ₹ 500 crore with ₹ 250 crore greenshoe option, and a co-investment option of up to ₹ 250 crore for some of its largest investors.

A greenshoe option allows a fund to raise additional money from investors.

“We have raised ₹ 700 crore and did the first close of the fund on 31 March, and will raise the remaining capital soon. We have already done a drawdown of 15% and started investing in deals. Though fund-raising is still not an easy exercise, it didn’t take us much time because there are investors who have reinvested with us," said Balaji Raghavan, director, IIFL Realty Ltd, a subsidiary of IIFL Group.

The two transactions from the new IIFL fund are primarily early-stage investments where the developer needs capital to go through the lengthy approval process along with a refinancing component, enabling the developer to replace an existing loan.

This would be IIFL’s second dedicated real estate fund, after it had launched its maiden ₹ 660 crore fund in 2011. The fund was fully deployed within 18 months from launch, and over the past two-and-a-half years, it has returned over 40% of deployed corpus to investors, apart from regular quarterly returns.

From its new fund, IIFL has committed ₹ 100 crore to an ongoing upscale residential project being developed by Pashmina Builders & Developers Pvt. Ltd in suburban Chandivali. It has put in the money to part-refinance an earlier loan and partly for project approvals, etc.

“There is good scope for sales in the area, given that there is a demand for good-quality projects, and not much supply available. We have got the commencement certificate for the first phase, which has 100 four-bedroom apartments and we are expecting approvals for the second phase, which has two- and three-bedroom apartments,"said Ritesh Sheth, director (finance), Pashmina Builders, which has projects in Bengaluru as well.

The second is a residential redevelopment project in Bandra West being developed by Midcity Infrastructure Pvt Ltd. IIFL has committed ₹ 80 crore to the project and already put in ₹ 45 crore of that for tenant settlement. Though it is a small project of around 55,0000 sq.ft of carpet area, it is of high value given the location where the property prices range between ₹ 50,000 and ₹ 55,000 a sq.ft.