IDFC Alternatives raises Rs750 crore for its first real estate fund

IDFC Alternatives Ltd, a multi-asset class fund manager with a corpus of Rs4,414 crore, has raised Rs750 crore from domestic investors.

The private equity firm would invest in residential real estate segment in India from the fund - IDFC Real Estate Yield Fund – its maiden fund. The fund is targeting residential projects which are under construction across the top six cities (Delhi, Mumbai, Chennai, Bangalore, Hyderabad and Pune).

IDFC Real is a focused debt fund with a medium-term horizon. It has so far committed Rs123 crore across two residential projects in Pune and Bangalore, the company said in a statement.

"This is our first real estate fund and we feel confident about its performance. The real estate sector is going through a tough phase in the backdrop of a market slowdown and most developers are stretched with reduced cash flows. This is the right time to plough money into the sector and structure transactions that will provide high yields going forward,'' said M.K. Sinha, Managing Partner and Chief Executive Officer at IDFC Alternatives.

Ritesh Vohra, partner, real estate investments, IDFC Alternatives, says,"This fund has some key differentiators - it is a focused debt fund that targets a regular distribution of income to investors. The fund would be invested in 'on-going' residential projects to mitigate execution related risks. It has a lower risk profile given the secured nature of underlying investments and has been designed to be an investor-friendly product."

The IDFC Real Estate Yield Fund will capitalise on the opportunities by focusing on debt deals that generate high yields, while ensuring downside protection and adequate security cover. It aims to build a high-quality portfolio by focusing on established developers and brown field residential projects, which will help generate superior returns for the Fund's investors by employing a balanced risk-return strategy.