A real estate company Puravankara Ltd subsidiary, Purva Asset Management Pvt Ltd, has received commitments from investors totalling almost Rs 200 crore, marking the first close of its first alternative investment fund (AIF-II).
Domestic UHNIs and family offices make up most of the first commitment, with a target corpus of Rs 750 crore.
“The target is to raise the entire corpus for the fund by September 2022. The fund will create a significant pool of capital via the AIF route for growth by creating a win-win scenario for investors and Puravankara,” said Ashish Puravankara, MD of Puravankara.
The Category II AIF Purva Real Estate Fund, which recently got the mandatory Sebi approval, will be managed by Purva Asset Management. The first fund scheme is known as “Purva Residential Excellence Fund-1.”
The fund would invest in residential and planned developments in Bangalore, Pune, Chennai, Hyderabad, and MMR under the Purva Land and Provident brands. Additionally, with a four-year development period, it will invest in six to eight mid-sized developments of Provident Housing.
The fund’s sponsor is Puravankara, and the two parties will combine on investments in ventures and property acquisitions.
The fund’s objective internal rate of return (IRR) is set at 25%, and its sponsor guarantees an IRR of 12%.
“There are protection clauses for the fund and its investors, including a price protection clause. The revenue sharing kicks in as soon as a project is launched and at the end of 66 months, which is the fund life, any residual investments will be bought back by Puravankara at a pre-identified internal rate of return, or IRR of 12%,” said Shailesh Viswanathan, director, Purva Asset management.
In 2020, IFC and IFC Emerging Asia Fund partnered with Puravankara to invest $76 million in the latter’s affordable housing projects in India. The Bangalore-headquartered firm has 16 million sq. ft. of planned launches across the residential segment, with an investment of Rs. 4000 crores over the next few years to develop these assets.
