If India needs to achieve the Housing for All Vision by 2022 the country needs $100 billion investment in housing every year to build 5 million homes annually.
MUMBAI: Private equity player Brick Eagle will raise `700 crore from investors for an affordable housing fund piggybacking on the Modi government’s thrust on low and middle income housing.The fund that recently got SEBI nod will invest in top 20 cities of the country and look at creating 100 homes with every `1 crore invested targeted primarily for LIG families.
The fund will be structured like debt and will invest in projects at the pre-approval stage; these projects will be curated by another arm set up by Brick Eagle itself. The investment will have a fixed yield ranging from 25-30%.
“We are talking to a couple of family offices who have given us soft commitment for the initial 510%, so initial `200 crore will come from people we already know and eventually we will raise more funds from HNIs both domestic and foreign,“ said Kirti Timmanagoudar, Managing Partner of Brick Eagle India Affordable Housing Fund. The fund will be closed ended for five years plus two years, the first close of the fund will happen in March and the second close by August-September.
If India needs to achieve the Housing for All Vision by 2022 the country needs $100 billion investment in housing every year to build 5 million homes annually . Of this $10 billion is needed for financing land alone, while another $10 billion at the pre-launch stage for approvals for the project. Another $10 billion is expected to come in via debt financing and the remaining $70 billion from home financing and funds from buyers, according to estimates shared by Brick Eagle for the affordable housing value chain. Brick Eagle has plans to build 1 million housing units by 2030 and would look at structured investments into affordable housing projects targeting exits in 2-4 years. The company has a land bank of nearly 1,000 acres.This is the third pool of capital raised by Brick Eagle Group; the first round of `60 crore was raised in 2011 and another $20 million in Singapore to invest in distressed foreign opportunities.
“While there are banks and NBFCs set up to lend to projects after they are approved, a significant portion of the funding is required prior to approval,“ said Timmanagoudar. “Currently there are none or very few Institutional investors set up to lend to projects at this stage. This is the void that Brick Eagle is trying to fill.“
Saloni Shukla, ET Bureau