BENGALURU: Manipal Education and Medical Group scion Ranjan Pai and former Infosys finance chief Mohandas Pai have floated a real estate investment fund to make small-sized investments in tier II property developers in Bengaluru and Mumbai, among others, according to people familiar with the matter.
The Rs 250-crore initial fund, named Neev, also counts three other investors as its co-founders. The sources added all the five partners have pooled in 35% of the first fund while the remaining would be contributed by HNIs. The founders also plan to start a larger fund of up to Rs 1,000 crore by next year.
Neev, which will kick off next month, will look to invest through debt deals or construction finance and finance against inventory, in small builders. The size of individual investments will range between Rs 10 crore and Rs 20 crore. About 80% of the fund is already in place.
When contacted, Ranjan Pai declined to comment. “The income-generating fund will also explore pre-development stage assets which do not come under institutional finance. Housing is still underserved and though the market is going through a slump currently with higher unsold inventory, the demand is expected to grow as the economy picks up,” Mohandas Pai said.
The Pais, who are not related, have made the investments through Aarin Capital, their proprietary investment vehicle. While Aarin has made numerous seed investments and took part in early- and growth-stage funding of various companies, this is possibly the first time it is entering the real estate market.
Aarin Capital has invested in a number of startups, such as B2B lending company Faircent, budget hotel chain FabHotels, and online holiday planning portal, Trip Factory, from the $100-million fund. Its latest move to sell 6-7% stake in edutech startup Byju to venture capital firm Lightspeed Venture Partners earned them almost 10-fold returns.
Bijay Agarwal, managing director of Salarpuria Sattva, and Prashant Deshpande, son of Karnataka industries and tourism minister R V Deshpande, are among the co-founders. Other investors include Micro Labs CMD Dilip Surana and Chenraj Jain, chairman of Jain Group of Institutions.
Funds such as Neev have become increasingly popular in the country at a time when property developers find it difficult to borrow from banks due to a prolonged slump in the sector and stretched balance sheets. Non-banking financial companies (NBFC) such as Piramal Realty, Altico and KKR’s real estate arm have put in significant money in builders across Bengaluru and Mumbai.
Credits Times of India