18 August 2015
RIYADH/DUBAI: 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 Sunday launched STAR Fund II with a corpus of $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 Bikram Sen, CEO of ArthVeda.
STAR Fund II has projected an IRR of 18-21 percent in dollar terms with maximum fund tenure of 60 months. The fund will have two closures, the first one that is scheduled three months after the launch or upon reaching an investment milestone of $ 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 $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 $500,000.
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 turnaround 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," 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 percent in Indian rupee 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 percent. ArthVeda also launched a low income household fund this year, ASHA Fund, in association with Aadhar Housing Finance Ltd. (AHFL), a DHFL joint venture with IFC, Washington, which exclusively focuses on mortgage finance for low income households.
STAR Fund II will make 35-40 percent investment across 11 cities in India like Mumbai, Bengaluru, Chennai, Ahmedabad, Kolkata, Coimbatore and Jaipur.
"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," Bikram Sen, CEO of ArthVeda said.
He said that the group collectively, lends $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 $5 million from the earlier $10 million.
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 the smart city mission and AMRUT. These 2 policies will inject huge funds into 600 cities and towns across India). The third policy will inject funds for housing for all where government will provide interest subsidies up to loans of 600,000 rupees to purchase houses to low income group and economically weaker households.
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 has become more attractive with the policy changes ushered by the government.
RIYADH/DUBAI: 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 Sunday launched STAR Fund II with a corpus of $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 Bikram Sen, CEO of ArthVeda.
STAR Fund II has projected an IRR of 18-21 percent in dollar terms with maximum fund tenure of 60 months. The fund will have two closures, the first one that is scheduled three months after the launch or upon reaching an investment milestone of $ 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 $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 $500,000.
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 turnaround 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," 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 percent in Indian rupee 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 percent. ArthVeda also launched a low income household fund this year, ASHA Fund, in association with Aadhar Housing Finance Ltd. (AHFL), a DHFL joint venture with IFC, Washington, which exclusively focuses on mortgage finance for low income households.
STAR Fund II will make 35-40 percent investment across 11 cities in India like Mumbai, Bengaluru, Chennai, Ahmedabad, Kolkata, Coimbatore and Jaipur.
"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," Bikram Sen, CEO of ArthVeda said.
He said that the group collectively, lends $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 $5 million from the earlier $10 million.
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 the smart city mission and AMRUT. These 2 policies will inject huge funds into 600 cities and towns across India). The third policy will inject funds for housing for all where government will provide interest subsidies up to loans of 600,000 rupees to purchase houses to low income group and economically weaker households.
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 has become more attractive with the policy changes ushered by the government.
© Arab News 2015
