Star Fund II is the first real estate fund to be offered to overseas investors following the recent changes in India FDI policy in realty sector by the new Government
Proceeds to be invested in mid-income residential properties in tier 1 and 2 cities in India
Dubai, UAE, August 16, 2015: Offering GCC investors a unique opportunity to reap dividends from India's mid-income residential real estate growth, global asset management firm ArthVeda Fund Management today launched STAR Fund II with a corpus of US$250 million.
STAR Fund II, part of ArthVeda' s STAR series of real estate funds, is the first realty fund to be offered in Gulf and other overseas markets, following the recent amendments to India's FDI policy in the realty segment.
"The mid-income residential segment in India is considered to be the sweet spot offering lower risks and high returns in a relatively short fund life. Thanks to huge demand and absorption of mid-income property across India, investments in this segment have low cyclicity and low average investment ticket size - exactly the opposite of premium residential real estate -and that makes STAR Fund II a prudent and growth-oriented investment opportunity for global investors," said Mr. Bikram Sen, Chief Executive Officer of ArthVeda
STAR Fund II has projected an IRR of 18-21 per cent in dollar terms with maximum fund tenure of 60 months. The fund will have two closures, the first one three months after the launch or upon reaching an investment milestone of US$ 100 million, whichever is early. The second and final closure will be six months from the first closure or upon total commitments to the tune of US$250 million, whichever is early.
The fund targeted at institutions, large corporate houses, sovereign wealth funds,family houses and High Net worth Individuals (HNI) in the GCC and other foreign markets has a minimum investment size of USD 500,000.00
Unparalleled expertise in realty
Mr. Sen said ArthVeda has unparalleled expertise and insights into the India realty as the company is part of a leading financial services group with Dewan Housing Finance Corporation Ltd. (DHFL), India's second largest private mortgage finance company as flagship entity.
"Our investment strategy is well researched and has been proven a success as our earlier domestic funds have given high returns. We believe that the key to realizing best returns in real estate is to invest in a market segment with high demand such as mid-income housing with small, quick turn-around projects. We also believe in diversity of investments in terms of number and geography of projects across metros, Tier - I and Tier - II cities. We also ensure that we enter at right valuation and our funds invest in projects with low land-to-sales value," Mr. Sen said.
While STAR Fund II is the first overseas fund of ArthVeda, its earlier realty funds include a metro and tier-1 city focused residential DREAM Fund I which closed in 2006 with a 17.00 per cent in INR CAGR gross return to investors. In the STAR Fund series, STAR Fund I was launched in 2012 with focus on mid-income housing and two exits have already been achieved with IRRs in excess of 31 per cent. ArthVeda also launched a low income household fund this year, ASHA Fund, in association with Aadhar Housing Finance Limited (AHFL), a DHFL joint venture with IFC, Washington which exclusively focuses on mortgage finance for low income households.
Investments across cities
STAR Fund II will make 35-40 investment across 11 cities in India like Mumbai, Bangalore, Chennai, Ahmedabad, Kolkata, Coimbatore, Jaipur, etc...
"ArthVeda is, perhaps, the only AMC that can successfully execute such strategies because of its group strengths. STAR Fund II will be done in conjunction with DHFL and AHFL, through which ArthVeda has access to a ground force of more than 5,000 personnel and relationship with 300 builders across 736 locations in India," Mr. Bikram Sen, CEO of ArthVeda said.
He said that the group collectively, lends US$ 350 million across India every month.
He said STAR Fund II could be offered in the GCC because of the FDI policy changes made by the federal government of India during last year's national budget session.
The new changes reduced the project size requirements for FDI investments to 20,000 square feet from 50,000 and minimum investment ticket size to US$5 million from the earlier US$10 million.
Mr. Sen said the new government of India has been taking heightened interest in real estate particularly to create affordable housing stock. Last month the government made 3 major policy announcements to show its commitment to increasing construction activity across India. The 3 policies are 1.The smart city mission2.AMRUT (These 2 policies will inject huge funds into 600 cities and towns aross India) 3. Housing for all where government will provide interest subsidies up to loans of INR 6 lacs to purchase houses to low income group and economically weaker households. Mr Sen asserts that the above 3 new policies will provide a direct impetus to Middle and Low incomes and EWS residential projects in Tier 2 and Tier 3 cities in India.The investment strategy of Star 2 Fund have become more attractive with the policy changes ushered by the government.
About ArthVeda Fund Management Pvt. Ltd.
ArthVeda Fund Management Pvt. Ltd. (AVFM) is in the business of asset management, with a focus on alternative investment funds covering asset classes such as real estate and traded markets. AVFM is a part of the NSE-listed Dewan Housing Finance Limited (DHFL) group, India's second largest private mortgage finance company, managing mortgage assets of over US$8 billion. The objective of ArthVeda is to manage funds (designed by in-house research team) that offer ample opportunities for extracting alpha i.e. high risk-adjusted returns. The company believes in "Value Investing" and predominantly follows this principle in all its investment decisions across asset classes. ArthVeda's investor-focused approach is guided by its belief in transparency and high standards of corporate governance.
© Press Release 2015
