Edelweiss launches $1bn India credit RE fund

Edelweiss Alternative Asset Advisors, the investment advisory arm of Mumbai-based Edelweiss Financial Services, has launched its first credit-focused real estate fund.

The firm is targeting an equity raising of $1 billion for the offshore fund to be invested in structured credit transactions in the residential sector in India.

The firm is yet to hold a closing, but is believed to have secured commitments from US and European institutional investors. Ananth Shenoy, head of credit alternatives at Edelweiss Alternative Asset Advisors, told PERE that the firm was working towards reaching a target first close of $350 million within a few weeks.

The fund, with a 6-year term, is being marketed to institutional investors and high-net-worth investors across Asia, Europe and the US. Capital deployment would start after the first close.

The firm is planning to invest the capital raised in structured credit transactions with mid-sized developers for residential real estate projects in Mumbai, Delhi, Chennai, Bangalore and Pune. The typical size of a deal is expected to be between $15 million and $75 million.

Edelweiss did not disclose the target returns via the fund. Typically, such deals in India are currently yielding IRRs of around 20 percent, according to market participants.

Edelweiss Alternative Asset Advisors has been investing in structured credit deals from its balance sheet, but this will be its first real estate fund with a credit strategy.

India’s property sector has been seeing a steady increase in the number of structured debt investments. In May, Motilal Oswal Real Estate, the real estate arm of the Mumbai-based financial services firm Motilal Oswal, raised INR5 billion (€70 million; $79 million) for India Realty Excellence Fund II, its second real estate fund. The capital raised is being invested in mezzanine debt deals in residential projects targeting middle-income buyers in key cities of India.