Investcorp announces US $130 million Indian Real Estate Direct Lending Initiative

15 Jan 2020

Leading global alternative asset management firm Investcorp has raised $130 million in anchor commitments which will primarily provide last mile funding in India, a market currently going through a liquidity crunch.

BAe Systems Pension Funds Investment Management Limited is the cornerstone investor for this initiative, which will focus on projects in the affordable and mid-market housing segment in the top seven cities in India and is subject to regulatory approvals and registrations. 

Vikram Aggarwal, Head of Private Markets, BAe Systems Pensions said, “We believe that the Indian affordable housing segment represents a sizeable and attractive market opportunity catalysed by urbanisation and structural reforms. BAe Systems is pleased to make a positive contribution to the development of affordable housing in India, where there is significant demand, but a lack of institutional quality capital to fund projects.”

Ritesh Vohra, Partner and Head – Real Estate, Investcorp India, added, “The current slowdown in the residential markets as well as in the flow of credit in India create an opportune timing for us to launch this new lending initiative, which builds upon our track record of similar credit investments in India. Affordable housing has emerged as a dominant segment, augmented by government efforts and the introduction of favorable policy reforms.”

Yusef Al Yusef, Managing Director, Investcorp, added, “The long-term secular trends of urbanization and rising income levels in India make this a compelling opportunity. We believe that the current short-term liquidity constraints in the market provides us an excellent platform to grow our real estate business.”

Investcorp manages over US $28 billion globally and at its core is a mid-market specialist. The firm is an active investor in the US and European real estate markets, targeting properties that generate current cash flow and have potential for capital appreciation through value-add initiatives, with annual transaction volumes of approximately US $2.5 billion per year. Since inception, Investcorp has invested in more than 765 properties totaling in excess of US $18 billion.

In India, the real estate business has deployed over US $200 million through two funds across 27 residential projects located in the top tier cities. The funds provided structured senior credit to mid-market and affordable housing projects being developed by well-established developers.

Investcorp is also active in the mid-market private equity space in India, having made five investments, in Zolo Stays, Citykart, Intergrow Brands, Bewakoof, and Nephroplus in 2019.