PropShare Capital raising Rs 100 crore distressed strategy fund

NEW DELHI: PropShare Capital, a tech-enabled commercial real estate investment platform, is set to raise a Rs 100-crore Covid-related distressed strategy fund that will acquire rent-yielding assets that are at attractive valuations due to price erosion triggered by the pandemic.

Commercial assets have seen a 20% price erosion, the company said, adding that many investors want to invest now to maximise returns.

The listing has already received an initial interest of more than Rs 600 crore and PropShare Capital plans to close this listing in the next 10 days.

This is the second such fund by the platform. Part of the first round of Rs 80 crore raised in June has been invested in a grade A property in Hyderabad with an estimated IRR of 19%.

“The launch of our second distressed strategy fund is the next logical step as we continue to capitalise on the window of opportunity that the pandemic has created – access to Grade A commercial assets at distressed prices,” said Kunal Moktan, cofounder and CEO of PropShare Capital.

By investing in distressed offerings, investors are being offered 25% lower management and performance fees which subsequently increases their cash yield by up to 1.75%.

Investors also get first and exclusive access to all distressed opportunities along with a chance to diversify across at least two investments.

“We believe returns are made at the time of buying and not selling,” Moktan said. “In the past, times of distress have led to oversized returns for investors and we expect the same to hold true once this pandemic subsides.”

The company has finalised a 65,000-square feet commercial asset in Bengaluru to invest some part of this fund and is actively looking at properties in Mumbai’s BKC and Delhi-NCR to deploy capital.

Experts believe that Covid-19 has impacted the market, but it has also created a window of opportunity to purchase Grade A assets at below-market prices.

The back office and offshoring centres of Bengaluru, Pune, Hyderabad and NCR have remained resilient as these businesses are not as affected by Covid-19 as other industries like hospitality, travel and retail, the company said.

PropShare had raised Rs 80 crore in their first distressed offering PDOF I (Propshare Distressed Offering Fund) earlier this year with participation from HNIs and ordinary investors, family offices as well as select institutional investors.

The first close of PDOF II is expected on Friday.

PropShare Capital raising Rs 100 crore distressed strategy fund PropShare Capital raising Rs 100 crore distressed strategy fund Reviewed by TechCO on 9/18/2020 Rating: 5

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