Real Estate Fund Number Six from Motilal Oswal Alternates reaches complete subscription
Motilal Oswal Alternates, the alternative investments arm of the Motilal Oswal Group, has marked the final close of its sixth real estate fund, the Indian Realty Excellence Fund VI (IREF-VI), at Rs 2,000 crore ($231 million). This significant milestone represents a 65% growth over its predecessor, indicating strong confidence from both domestic and global investors.
The primary focus of Motilal Oswal Alternates in real estate is on mid-income residential developments. This strategy is designed to cater to the growing demand from urban homebuyers in major cities across India. In addition, the platform has positioned itself as a provider of alternative credit solutions, offering customized funding options to developers, which helps bridge the funding gap in the real estate sector.
The investments are spread across key cities such as Mumbai, Pune, Chennai, Bangalore, Hyderabad, and Kolkata. This diversified geographic strategy allows the fund to capitalize on regional growth opportunities. As of the latest update, 75% of the corpus from IREF-VI has been deployed across 15 projects in these cities, with partner developers including notable firms like Ajmera Realty, Runwal Enterprises, and Ambuja Neotia Group.
Saurabh Rathi, managing director and co-head of realty at MO Alternates, stated that credit demand for land acquisition in India is accelerating rapidly due to renewed residential development, rising land values, and limited availability of structured capital. He also emphasized that alternative credit platforms are increasingly stepping in to bridge the funding gap with tailored solutions that meet the unique needs of developers.
The fund has already recorded its first exit, achieving an internal rate of return (IRR) of 20.25%. This demonstrates the fund's ability to generate returns on its investments.
Following the success of IREF-VI, Motilal Oswal Alternates is planning to launch its seventh real estate fund. This continues the pattern of growth and expansion in the real estate credit space for the company. The hard cap for the fund remains unchanged.
MO Alternates manages more than $2 billion in cumulative AUM across real estate and private equity. The platform has made over 180 investments and secured more than 110 complete exits, with a cumulative AUM in real estate exceeding Rs 10,000 crore across six real estate funds and co-investments. Offshore investors also committed to IREF-VI through the GIFT City route.
A significant portion of the capital for IREF-VI was raised from family offices and Indian high-net-worth individuals. Last year, the fund's structure was rejigged, with the base target increased to Rs 1,500 crore and the greenshoe option reduced to Rs 500 crore. The details of this first exit were not disclosed in the statement.
Finance plays a crucial role in Motilal Oswal Alternates' strategy, as they offer alternative credit solutions to developers in the real estate sector. The company, through its Indian Realty Excellence Fund VI (IREF-VI), has successfully bridged the funding gap with tailored solutions that meet the unique needs of developers.
Building on the success of IREF-VI, Motilal Oswal Alternates plans to launch its seventh real estate fund, showcasing their continued focus and expansion in the real estate credit space. Given their track record, it is clear that finance is essential for their continued growth and success in this sector.
