Mumbai-based financial services firm Brick Eagle Capital Advisory Llp has raised Rs 50 crore ($7.8 million) each from media house The Times Group-owned Bennett Property Holdings Company Ltd and private-sector lender Axis Bank as anchor investment for its Rs 500 crore ($78 million) affordable housing fund.
Brick Eagle India Affordable Housing Fund is a Category II alternate investment fund registered with the market regulator the Securities and Exchange Board of India.
“Our fund has been created with local developers’ requirements in mind and will make small investments at early stages. We invest in developers that target end customers as home buyers and not investors. Hence the sales velocity, business profitability and ultimately IRRs are not dependent on economic cycles,†Kirti Timmanagoudar, managing partner of Brick Eagle Capital Advisory, said in a statement.
“Affordable housing is a huge opportunity as India moves forward with themes like ‘Housing for All’ and ‘Make in India’. The segment will take some time to reach a level of maturity and competitiveness,†said Joanna DeSouza, president of Bennett Property Holdings Company Ltd.
VCCircle first reported last year that Brick Eagle Capital is planning to float an alternative investment fund focussed on affordable housing projects.
Established in 2011, the firm provides project financing to the local developers, according to its website.
It previously raised Rs 400 crore for providing project finance, which has been deployed across nine cities and eight developers, the company said.
Of late, the affordable housing segment has received a lot of attention, thanks to the Narendra Modi government’s plan to provide housing for all Indians by 2022. In the Budget for 2017-18, Finance Minister Arun Jaitley said the government will accord infrastructure status to the affordable housing sector while expanding the scope of what constitutes such dwellings.
While presenting the Budget, the finance minister said 1 crore houses will be built for the homeless by 2019. The government also increased allocation for Prime Minister Gramin Awas Yojana to Rs 23,000 crore for FY2017-18 against Rs 15,000 crore in FY2016-17.
Recent deals
Earlier this month, ASK Property Investment Advisors, the real estate private equity unit of ASK Group, and TVS Emerald Haven Realty Ltd set up an investment platform to back residential projects of the property development arm of TVS Motor Company. The partners will jointly invest Rs 400 crore ($62 milllion) in affordable and mid-segment projects.
In June, financial services firm SMC Global Securities Ltd and asset management company IM+ Capitals Ltd launched a $75 million real estate fund focussed on the mid-size affordable housing segment.
In May, private equity giant Kohlberg Kravis Roberts & Co Ltd (KKR) agreed to invest Rs 200 crore ($31 million) across a portfolio of affordable housing projects of Gurgaon-based developer Signature Global.
In February, ArthVeda Fund Management Pvt. Ltd, an associate company of mortgage lender Dewan Housing Finance Ltd, received a commitment of $250 million from Qatar Holding LLC, a unit of Qatar’s state-owned holding firm, for its affordable housing fund.
