17 August 2015
Muscat: Offering GCC investors a unique opportunity to reap dividends from India's mid-income residential real estate growth, a unique fund with a corpus of $250 million was launched yesterday.
Star Fund II, part of global asset management firm ArthVeda Fund Management'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, 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 $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.
"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," Sen further 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 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.
Star Fund II will make 35-40 investment across 11 cities in India like Mumbai, Bangalore, Chennai, Ahmedabad, Kolkata, Coimbatore and Jaipur.
Muscat: Offering GCC investors a unique opportunity to reap dividends from India's mid-income residential real estate growth, a unique fund with a corpus of $250 million was launched yesterday.
Star Fund II, part of global asset management firm ArthVeda Fund Management'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, 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 $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.
"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," Sen further 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 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.
Star Fund II will make 35-40 investment across 11 cities in India like Mumbai, Bangalore, Chennai, Ahmedabad, Kolkata, Coimbatore and Jaipur.
© Oman Daily Observer 2015
