New Delhi, June 23 -- Mumbai-based Motilal Oswal Alternates (MO Alts), the alternative investment arm of Motilal Oswal, on Monday said it has fully exited its second real estate credit fund, delivering a gross internal rate of return (IRR) of 18.3%.
The fund, India Realty Excellence Fund - II (IREF II), closed in April 2015 after mopping up Rs 489 crore ($56.3 million). While raising capital for the fund, the firm had said that it was targeting an IRR of up to 25%. The fund made 14 investments in pre-approval stage residential projects in the mid-income segment.
"This has been a deeply instructive fund cycle. The importance of proactive asset management-spotting stress early, taking swift action, and maintaining developer alignment-has stood out as a key differentiator," said Saurabh Rathi, managing director and co-head of the real estate investment unit at MO Alts.
With the conclusion of this fund, MO Alts' real estate platform has cumulatively completed over 110 exits across 180 investments to date.
As of August 2019, IREF II had secured nine exits with an IRR of 21.3%. In an earlier interaction with VCCircle, then fund manager Sharad Mittal had said that MO Alts planned to exit its investments from the second and third funds by September 2023, citing a buoyant real estate market.
MO Alts is currently raising and deploying capital from its latest fund, IREF VI, which has secured commitments of Rs 1,750 crore towards a hard cap of Rs 2,000 crore. According to its website, MO Alts has mopped up $260 million for the fund and invested at least Rs 1,000 crore across 10 investments.
In February, Rathi told VCCircle that MO Alts plans to shore up deployment this calendar year to Rs 2,000 crore, citing a strong deal pipeline. However, he said exits may slow, with expectations to realize about Rs 1,000 crore ($114.8 million then) from earlier funds. In 2024, the firm exited 16 deals, harvesting about Rs 1,350 crore of capital.
He said that the investor's exit focus over the next two-three years would be on its third, fourth, and fifth funds. According to its website, MO Alts has exited 18 of 26 deals from IREF III, 18 of 37 from IREF IV, and three of 15 from IREF V.
MO Alts' real estate assets under management stand at Rs 10,000 crore, while total AUM across real estate and private equity is valued at $2 billion. The firm recently launched its private credit vertical, hiring former Modulus Alternatives executive Rakshat Kapoor to lead the strategy.
Published by HT Digital Content Services with permission from VC Circle.