Motilal Oswal Real Estate is planning to raise Rs 300 crore from Indian investors, via a real estate fund with a greenshoe option of Rs 200 crore.
The proposed India Realty Excellence Fund II LLP, with a total tenure of four years, including two extensions, will be the second fund of Motilal Oswal Private Equity's real estate arm. The company's financial arm, Motilal Oswal Financial Services, has committed 20% of the proposed fund as seed capital.
"The current environment provides interesting counter-cyclical investment opportunities in the next 12-18 months," said Sharad Mittal, director and head of real estate investments at Motilal Oswal Real Estate. "The fund will capitalise on opportunities by focusing on mezzanine transactions which will have the characteristics of structured debt with an upside kicker."
Mezzanine financing refers to debt capital that gives the lender rights to convert to an ownership or equity interest in the firm if the loan is not paid back in time and in full. The private equity fund is tapping ultra-high networth individuals and high networth individuals for its real estate fund and is expecting an IRR of 25% at investment level.