Indiareit Apartment Fund
Indiareit Apartment Fund
Indiareit Apartment Fund
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CONTENTS
1 INDIAREIT APARTMENT FUND : STRATEGY & OVERVIEW
2 PIRAMAL FUND MANAGEMENT : CREDENTIALS & CAPABILITIES
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EXECUTIVE SUMMARY
Strong sponsor: Piramal Fund Management provides capital across the risk spectrum, providing Indiareit access to attractive off market deals:
Competitive
Advantages
Managing INR 7,554 Cr at present across 7 funds and 3 third party mandates; Disbursed INR 2925 Cr through proprietary real estate loan book
Established track record: Deployed INR 3,191 Cr across 33 projects from 7 funds raised and achieved exits worth INR 1,228 Cr
Trusted fiduciary: Won three mandates for managing third party portfolios, and has a successful track record of executing such mandates
Highly experienced team: Led by Mr. Khushru Jijina, with an experienced team of 49 professionals and strong on-ground presence with offices in 4
key cities in India
In-house development skills and focus on physical underwriting: Uniquely positioned with a team comprising of professionals from real estate
development background and an established development team. Consequently, it possesses capabilities of taking over projects from developers to
ensure project completion, either through 3rd party developer or through own development team in specific situations
Strong developer relationships: Excellent relationship with development partners exhibited by repeat transactions with select developer partners
Warehousing benefits: Willingness of the Sponsor to warehouse deals in advance of fundraising, providing access to deals with short funding
timelines, and deployment immediately on drawdown; efficient utilization of drawdowns
The fund aims to underwrite projects at a significant discount to the market, by offering a bulk purchase of residential units, to the developer
Offer liquidity / a funding solution to the developer but translated into purchase of units at a discount to prevailing market price
Focus on select locations that stand to benefit from the on streaming of infrastructure during the investment tenure
Fund Size: INR. 350 Crs with a green shoe option of INR. 350 Crs
Fees: Setup: Upto 2.00%, Management Fees: 1.50% p.a. on the drawdown collected; Performance Fee: 20% over a 10% hurdle (without catch up)
Fund Strategy
Fund Structure
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01
INDIAREIT APARTMENT FUND
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Delay in approvals; increase in construction costs; change in regulations and policy paralysis further increases carrying
cost of project thereby increasing burden on liquidity
Limited Sources / High Cost of Funding Banks reducing exposure; NBFC terms inflexible
Execution money required developer actually focused on development in order to advance cash flows from existing sales
All of above creates a situation for tweaking fund model to ensure an aligned position i.e. win-win for all stakeholders
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FUND OVERVIEW
Creates win-win for all stakeholders i.e. developer and investors
To acquire residential apartments in Tier 1 Markets at a significant discount to the market, by offering a
bulk purchase of residential units, to the developer
FUND THEME
The fund will underwrite units only i.e. physical square feet rather than financial participation
Well defined use of funds, appropriate security and monitoring mechanism and developer alignment of
paramount importance in underwriting process
Focus on investments in select projects at an attractive price points and appropriate stage of entry
DEVELOPER
RATIONALE
Enables developer to advance construction and delivery of initial sales with institutional participation
Increased pace and visibility of construction also results in better positioning vis a vis comparable projects
and drives further open market sales
Also enables developer to avoid a drop in price for open market; and ride the upside beyond a certain
threshold
INVESTOR
RATIONALE
Ability to get value deals by committing to a bulk purchase; ability to leverage existing relationships with
development partners to originate attractive opportunities on a sustainable basis
Ability to participate in a secured position with benefit of diligence and structuring vis a vis an individual
transaction
Quicker realization of attractive risk adjusted returns vis a vis retail participation at prevailing market price
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INVESTMENT MATRIX
A combination of structured / downside protected and upside only transactions
TENURE: 3 5 YEARS
TENURE: 2 3 YEARS
Co-investment Opportunity
Anchor investors will be eligible for specific co-invest opportunities alongside the Fund
Co-investment opportunities (where available) will be restricted to the purchase of a maximum of one unit per investor, on a first
come first served basis
An upfront fee of 2% will be charged on all co-investments; subsequently co-investments would NOT be subject to any further
management or performance fee
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UNDERWRITING PROCESS
Typical Underwriting & Security
Fund to retain exclusive charge of allotted units (and additional area as appropriate for downside protection)
Units to be transferred to separate SPV and excluded from any mortgage / charge being created by developer
Separate escrow account to be created for identified units; operated by Fund independently
Sales price / sales schedule with respect to allotted units to be decided by the Fund
Drag on developer sales to ensure that sales of allotted units are equalized
~1.5x cash cover based on prevailing market price / ~2x cash cover based on proposed exit price
Execution of collateral - Hypothecation of receivables from sale of allotted units / promoter and corporate guarantees /
Promissory notes & PDCs amounting to minimum return
Robust process to benefit from Piramal Groups sourcing and evaluation capabilities
Steps
1 Deal sourcing
2 Deal evaluation
3 Investment decision
4 Investment management
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Brief overview
Source investment opportunities through strong network and local relationships; opportunities to abide
with investment guidelines established for the platform
Analyse potential returns and risks, assuring that the deal meets return requirements and fits in the risk
appetite of the investors; present proposal to the Investment Committee
Active management and oversight of the investment post fund infusion; regular asset management
functions and distributing returns to investors
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SEED TRANSACTION
RESIDENTIAL PROJECT IN MUMBAI
Investment Size
INR 50 Cr
Deal Type
Late Stage Apartment Buyout (units selected based on saleability and pace of construction)
Project Type
Slum Rehabilitation project under regulation 33(10) of the Development Control Regulations
Return*
IRFs acquisition price yields an effective discount from the current sales price of INR 14,000 psf, of which 35% - 55% is payable
immediately as per the Construction Linked Plan depending on unit in question
Minimum IRR of 16.5% (at INR 14,000); Upside until INR 16,000 shared 67:33; Upside beyond INR 16,000 shared 20:80
Exit Price: 14,000 (Current Market Price) Gross Return: 19.1%
Exit Price: 15,000 Gross Return: 24.1% / Exit Price: 16,000 Gross Return: 28.9%
*Effective realization / IRRs at different price levels may differ slightly depending on actual unit being underwritten
Tenure
Primary Security
First and exclusive charge on the identified apartments and the escrowed cashflows from sale of the said apartments
Other Security
Additional 20% area offered as a security. The additional area may be sold if the funds returns are not met
100% share pledge, Undated Cheques, Promissory Notes, Corporate and Personal Guarantees
Control Mechanisms
Mitigants
Sales Risk
Execution Risk
All major approvals are in place and Principal Contractor for execution is L&T
(a highly reputed Indian contracting company)
As per the Construction Linked Payment plan 90% of the payment will be collected
in the next 2 years when the RCC structure is expected to be completed
Cashflow Sensitivity
1.85x cash cover at the proposed exit price of INR 16,000 psf and 1.62x cover assuming no appreciation from the current levels
of INR 14,000 psf
Discounted price along additional area for price protection adequately covers repayment of interest and returns
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Site Progress
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Target Size
Type
Category II AIF
Sponsor Commitment
Term
Five years from date of Initial Closing; with an option to extend if and as required only with super majority consent
Investment Period
Two years from date of Initial Closing; with an option to extend for 1 year
Target Returns
26.0%+ IRR
Setup Fee
Management Fee
Performance Fee
Catch Up
None
Reinvestment
None
Target Cities
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02
PIRAMAL FUND MANAGEMENT
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Capable of catering to entire capital stack of real estate sector ranging from vanilla equity and structured investments to senior secured debt and construction funding
Integrated platform provides unparalleled skill sets, sector experience and industry relationships, strengthening platforms ability of delivering superior risk adjusted
returns for investors and sponsors
Amongst the first and few Indian players to complete full cycle of
Cr(1)
Preferred partner
for developers
and investors
alike with
integrated
capabilities
F&C REIT
Particulars
Unit
Domestic
Offshore
Third Party
Total
Particulars
Units
Real Estate
Education
Total
Funds
10
Investments
39
11
50
AUM
INR Cr
3,403
2,350
1,801
7,554
Sanction
INR Cr
2,655
486
3,141
Investments
29
12
32
Disbursement
INR Cr
2,455
470
2,925
Investments
INR Cr
2,165
727
1,315
3,141
Outsanding
INR Cr
1,568
368
1,936
Exits
10
17
18.2%
15.2%
17.7%
Exits
INR Cr
695
533
259
1,487
INR Cr
887
102
989
1)
Expected returns
Repayments
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ON-THE-GROUND PRESENCE
FOCUS AND EMPHASIS ON LOCAL ORIGINATION AND MONITORING
Seasoned professionals with strong operational and underwriting experience in Indian real estate
Khushru Jijina
Managing Director
Arvind Pahwa
Executive Director
Sachin Deodhar
CFO
Amit Diwan
Partner
Financial Control
Sunil Adukia
Vice President
Ankur Maheshwari
Associate Principal
Arvind Sharma
Manager
CV Ramani
Executive
Geetika Rajput
Executive
Legal / Compliance
Anand Vardhan
Vice President
Pooja Gaonkar
Associate Principal
Suprio Bose
Associate Principal
HR/Admin
Sheryl Jacques
Chief Manager
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Sudha Ravi
Executive Director
Pawan Sawhney
Partner
Vaibhav Rekhi
Partner
Manoj Rajan
Principal
Rujita Rele
Associate Principal
Keshav Jain
Investment Manager
Zubair Jiwani
Investment Manager
Bangalore
Chennai
Navin Dhanuka
Principal
Santosh Soni
Principal
Saurabh Vikhe
Associate Principal
Amit Shukla
Investment Manager
Vaibhav Saxena
Associate Investment Manager
Funds
Pune
Khodadad Pavri
Principal
Abhishek Mundhra
Associate Principal
Amit Upadhyay
Investment Manager
Virag Shah
Associate Investment Manager
Hitesh Dhankani
Principal
Dinesh Ajwani
Associate Principal
Ankush Ahuja
Associate Principal
Devendra Khilari
Associate Principal
Nihar Shah
Senior Associate
Garima Bhatnagar
Associate
Investor Relations
Krishna Kumar
Principal
Pawan Bommireddipalli
Investment Manager
Kumaran Chandrasekaran
Associate Investment Manager
NCR
Dhruv Ahuja
Associate Principal
Raghav Vij
Associate Principal
Mukul Singh
Associate Principal
Gaytri Udeshi
Sr.Client Relationship Manager
Ravi Kumar Gupta
Sr.Client Relationship Manager
Rohit Patankar
Associate
Swapna Dinakar
Associate
Geeta Jabi
Associate
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Mr. Ajay Piramal is the Chairman of the Piramal Group, a diversified conglomerate with business interests across pharmaceuticals, packaging,
financial services and real estate. He is also the Chairman of Pratham, which is the largest non-governmental organisation in the education sector. Mr.
Piramal serves on the Indian Prime Ministers Task Force on Pharmaceuticals & Knowledge-Based Industries and Council for Trade & Industry. He is
a member of the Government of Indias Board of Trade. Mr. Piramal completed his Masters in Management Studies from Jamnalal Bajaj Institute of
Management Studies, and completed his Advanced Management Programme from Harvard Business School in 1992. Today, he serves as a member
on the Board of Deans Advisors at Harvard Business School.
Mr. Jijina has an illustrious career spanning over 2 decades in the field of real estate, corporate finance and treasury management and has been with
the Piramal Group for around 12 years. He was a key member of the founding team of INDIAREIT in 2006. He was the Executive Director in Piramal
Sunteck Realty, where he was responsible for a portfolio of projects spanning Mumbai, Navi Mumbai, Nagpur, Jaipur and Oman and oversaw all
aspects of their execution. Mr. Jijina is a Chartered Accountant.
Mr. Desai is Executive Vice Chairman of DSP Merrill Lynch, and is one of its founding Directors. He was a member of the Committee on Takeovers
appointed by SEBI and was a Member of: RBI Capital Markets Committee, Advisory Group for Securities Market of RBI and Insider Trading
Committee of SEBI.
Mr. Rajesh Khanna is the founder & CEO of Arka Capital Advisors Pvt. Ltd. Previously, he served as a Managing Director and India Head of Warburg
Pincus, a global private equity firm, and was a member of its global Executive Management Group. Mr. Khanna is a Director of Lemon Tree Hotels,
Max India and Max Life Insurance Company. Prior to joining Warburg Pincus, he worked with Citibank N.A. and Arthur Andersen & Co. He received
an MBA from the Indian Institute of Management, Ahmedabad, and is a Chartered Accountant.
Tara is the Chief Operating Officer at JM Financial Products Ltd. Previously, she was a Director with the Sun Group. Earlier, Tara was a part of HDFC
Limited as Deputy General Manager, Commercial Real Estate where she was a part of a team formulating funding and underwriting strategies.
Mr. Shah is a solicitor and senior partner at M/s Crawford Bayley & Co. Mr. Shah is also a Member of the Managing Committee of Bombay Chamber
of Commerce, Indo German Chamber of Commerce and president of Society of Indian Law Firms.
Mr. Dalal has till recently been a partner of Dalal & Shah, Chartered Accountants and has also been a partner of Price Waterhouse & Co. He has also
held directorships in Wyeth Limited, Akzo Nobel Chemicals (India) Ltd., ICICI Investment Management Co. Ltd., Financial Technologies (India) Ltd.
And Multi Commodity Exchange of India Ltd.
Mr. Bhukhanwala is a Director of Bhukhanwala Holdings Private Limited. A closely held boutique investment company. He was earlier a part of the
team that setup Intels venture capital operations in India. Prior to Intel, he has worked with Mckinsey and Company in London focusing on pan
European strategies in the telecom and enterprises sector. Mr. Bhukhanwala is a MBA from INSEAD, France.
Ajay Piramal
Khushru Jijina
Shitin Desai
Rajesh Khanna
Tara Subramaniam
R.A. Shah
Ashish Dalal
Niraj Bhukhanwala
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Khushru Jijina
re-joined as
Managing
Director
Dec 2012
Dec 2013
Feb 2014
Mandated as
Advisor to IIFLs
INR 750 Cr
Income
Opportunities
Fund Special
Situations
Closed Mumbai
Redevelopment
Fund, raising
INR 500 Cr
Sep 2012
Aug 2013
Announced exits
worth INR 1000
Cr from vintage
fund
investments(1)
Jan 2014
Final close of
Domestic Fund V
at INR 1000 Cr
including
greenshoe option
Appointed as
advisor to PEL
CPPIBs US$ 500
Mn residential
debt alliance
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Project
Location
Feb-13
Marvel
Pune
Feb-13
May-13
100
100
24%
Mumbai
100
100
24%
Ariisto TDR
Mumbai
75
125
200
26%
May-13
Ashiana
Gurgaon (NCR)
100
100
26%
Oct-13
Omkar Ghatkopar
Mumbai
125
125
27%
Dec-13
Valmark
Bangalore
90
90
26%
Dec-13
Arkade
Mumbai
60
60
24%
Feb-14
Satya
Gurgaon (NCR)
99
99
22.5%
April-14
Marvel II
Pune
150
150
23%
175
350
250
249
1,024
Total
Target IRR
(1)
In addition to the above, Piramal Fund Management has also committed INR 1950 Cr across 38 investments as part of proprietary loan book
75
30
10
Deals Reviewed
(1): Target IRRs mentioned are as per underwriting; there can be no assurance, representation or guarantee that the objectives of the fund will be achieved
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DISCLAIMER
This presentation is made for informational purposes only and should not be regarded as an opinion, legal or otherwise, of any kind or a recommendation. It does not
constitute an offer, solicitation or an invitation to the public in general to invest in the AIF.
The purpose of this document is to provide general information to prospective investors to assist them in making investment decision. It does not purport to contain all the information that the
prospective investor may require. This presentation is interned for the use of prospective investors only to whom it is addressed and who is willing and eligible to invest in the Fund.
The information contained in this presentation is obtained from sources believed to be reliable. We do not represent that any information, including any third party information, is accurate or
complete and it should not be relied upon without proper investigation on the part of the investors. The investment manager or any of its directors, principal officers/employees do not give
any assurance/guarantee for any accuracy of any of the facts/interpretations in this presentation, and shall not be liable to any person including the beneficiary for any claim or demand for
damages or otherwise in relation to this opinion or its contents. The aimed returns mentioned anywhere in this document are purely indicative and are not promised or guaranteed in any
manner. Returns are dependent on prevalent market factors, liquidity and credit conditions. Instrument returns depicted are in the current context and may be significantly different in the
future. There is no guarantee that aimed returns may be met. All aimed returns are on a pre-tax basis unless specifically mentioned. This presentation may contain certain forward looking
statements which are merely indicative and should not be treated as representations. Due to various risks and uncertainties, actual events or results or the actual performance of the Fund
may differ materially from those reflected or contemplated in such forward-looking statements.
There can be no guarantee that the position regarding taxation of the Fund and taxation of investors of the Fund would be necessarily accepted by the income-tax authorities under the
Indian Income Tax Act, 1961. No representation is made either by the investment manager/trustee/advisor or any of their employee, director, shareholder or agent, in regard to the
acceptability or otherwise of the above position regarding taxation of the Fund and taxation of the investors of the Fund by the income tax authorities under the ITA.
The contents of this presentation should not be treated as advice relating to investment, legal or taxation matters. It is recommended that, prospective investors consult their stockbroker,
banker, legal adviser and other professional advisers to understand the contents of this presentation. This presentation is qualified in its entirety by the Private Placement Memorandum and
other related documents, copies of which will be provided to prospective investors. The Fund shall not accept investments from any person without receiving necessary regulatory approvals.
Each prospective investor is hereby invited to meet with and/or to ask questions to the representatives of the investment manager concerning the terms and conditions of making investment
and to request any additional information, which such representatives possess or can acquire without unreasonable effort or expense. All investors must read the detailed Private Placement
Memorandum including the Risk Factors therein before making any investment decision/contribution to AIF.
Capitalized terms used herein shall have the meaning assigned to such terms in the Private Placement Memorandum and other documents.
The prospective investors are requested to read the Private Placement Memorandum and the Investment Agreement/Contribution Agreement of the Fund before Investing.
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