Piramal in INR5bn luxury residential exit

The Mumbai-based fund manager has made the first full exit from its domestic residential fund and expects to return 75 percent of the invested capital by the end of this year.  

Mumbai-based real estate fund manager, Piramal Fund Management, has agreed to exit its investment in a residential development project in Mumbai for approximately INR5 billion (€69.27 million; $76.62 million).

The exit marks the first full exit from Indiareit Domestic Scheme IV, an INR9.2 billion residential real estate fund raised in 2010.

Piramal Fund Management said in a statement that it has ‘termsheeted’ the exit of its investment in Omkar 1973, a luxury residential project being developed in Worli, Mumbai by the Omkar Group, a Mumbai-based real estate developer. The firm had invested INR2 billion in equity via the Indiareit Domestic Scheme IV in mid-2011. The developer is now understood to have bought back the investment in a deal that reflects an IRR of 24 percent and a 2.5x multiple.

The capital raised via Indiareit Domestic Scheme IV was deployed in eight residential projects. In addition to the exit from Omkar 1973, the firm has returned INR1.06 billion via three partial exits to its investors. Two of these are self-development projects being carried out in Bangalore, while the third is interest payments being received from an investment with the Marvel Group, a Pune-based developer.

The firm is also expecting to make another exit and one partial exit via the fund within the next quarter of this year, following which the fund would have returned around 75 percent of the capital raised by the end of the year.

“From our investors’ perspective, exits are perhaps the most visible and important aspect of the investment life cycle and we are pleased to be validating the performance of Scheme IV at this early juncture. With the exit from Worli, we will be returning a large quantum of the initial corpus at a very attractive return. This cycle of exits from Fund IV will continue as we proactively generate more exits in the coming months,” said Khushru Jijina, managing director, Piramal Fund Management.

Piramal Fund Management, formerly called Indiareit Fund Advisors, also has other investments in the Omkar 1973 project. Previously, the firm is understood to have made a debt investment of INR1.3 billion, which is expected to be paid by December this year, according to local media reports. Additionally, in March this year, it invested INR12 billion as project financing. The financing includes senior debt along with project funding on a 20:80 payment scheme. Of the INR12 billion, INR8 billion is being used to finance the project’s construction progress over the next two years, and the remainder would be lent to Omkar to refinance existing lenders against a pari passu senior charge on the cash flows and development rights, which essentially would rank the firm’s debt as equal to all other debt issued by the borrower.