Purva Asset Management Pvt Ltd, a subsidiary of real estate firm Puravankara Ltd, has launched a Rs 750 crore alternative investment fund (AIF) to infuse in affordable housing projects and plotted developments.
Puravankara creates budget homes under the Provident brand, plotted projects under Purva Land, and premium housing under the Puravankara brand. The Category II AIF Purva Real Estate Fund, which recently got the mandatory Securities and Exchange Board of India (Sebi) approval, will be overseen by Purva Asset Management, and the first fund scheme is called Purva Residential Excellence Fund-1. It plans to raise Rs 500 crore for the fund, along with a Rs 250 crore greenshoe option from mainly domestic investors, including family offices and ultra-high net worth individuals. The first fund will invest in six-eight mid-sized projects for affordable housing with a four-year development timeline and plotted projects of up to 1.1-1.5 million sq ft. The projects will be in Pune, Hyderabad, Bengaluru, Chennai, and Mumbai Metropolitan Region (MMR). It is striving to accomplish the first close of Rs 200 crores in the next two months. IFC and IFC Emerging Asia Fund collaborated with Puravankara to infuse $76 million into the latter’s affordable housing projects in India in 2020. The most significant aspect of our business is the requirement for capital, and given how well Provident has performed, the company wanted to create a dedicated fund for it. As we raise these funds, they will be utilised to acquire land for the projects. The fund will have a revenue-sharing arrangement with Provident or Puravankara. The big idea is that Purva Asset Management will create different pools of capital going forward. Once this fund is raised, there would also be a second fund, managing director Ashish Puravankara told the media. Bengaluru-based Puravakara is a sponsor of the fund, and the two will co-invest in projects and acquire land parcels. There are protection clauses for the fund and its investors incorporated, including a price protection clause,Puravankara said. The revenue sharing kicks in as soon as a project is launched, as per the agreement. At the end of 66 months, which is the fund life, any residual investments will be bought back by Puravankara at a 12% pre-identified internal rate of return (IRR). The fund will work at an arm’s length, and the firm is putting together a three-member advisory board. Image Source
