Walton Street BlackSoil Real Estate Debt Fund II announced on Thursday that it has completed an initial close of ??360 crore and will provide debt financing to largely middle-income residential projects in the first six cities.
The fund has a target corpus of ??500 crore, with an option of green shoes of ??250 crores. High net worth individuals (HNIs) and national family offices have invested in the fund, which will be fully raised by December. The debt fund is registered with the Securities and Exchange Board of India (Sebi) as a Category II Alternative Investment Fund (AIF).
The Walton Street BlackSoil fund is raised at a time when financing for construction has become a big challenge for developers.
The first fund, Walton Street BlackSoil Real Estate Debt Fund I, was launched in 2018 with a ??320 crore corpus. It was fully deployed earlier this year and has made 10 investments in Bangalore, Hyderabad and Mumbai, more than 50% of which have been returned, the company said.
“The demand for debt is high given that there is a capital vacuum for real estate development, with banks and NBFCs providing limited loans to projects. Our second fund has a similar strategy to our first and we will combine last mile funding and inventory. From our perspective, we want to take a risk reduction stance in our transactions rather than a higher return, ”said Kaushik Desai, Managing Partner, Walton Street India Real Estate Advisors Pvt. Ltd in an interview.
The second fund being larger, will carry out more trades and transactions of relatively large size than the first.
“… The goal of our second fund is to provide financing to developers with a proven track record of executing in the middle-income housing sector in our key markets, driven by end-user demand, to ” invest in key projects with full control over cash flow and visibility into financial close and completion. We have received a tremendous response from previous investors in WSBREDF-I for our second fund, ”Desai said.
Since banks are reluctant to lend, a number of real estate funds step in to fill the void, but at a higher cost of lending.
The affordable and mid-range residential segment accounted for more than half of new launches in April-June 2021, the company said.
“With reduced availability of capital for residential real estate development, funds generated by the second fund or WSBREDF-II will be deployed to provide financial assistance to developers to ensure constant cash flow and rapid completion of projects.” , did he declare.
Recently, BlackSoil and the former India-based management team of US real estate investment advisor Walton Street Capital, LLC acquired the real estate debt business of Walton Street India.
Following the buyout, WSBREDF-II is no longer affiliated with or advised by affiliates of Walton Street Capital, LLC.
Since 2013, and before the launch of the second fund, Walton Street Capital India and BlackSoil have jointly placed more than ??1,500 crore of loan capital through 50 real estate transactions.
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