Edelweiss Alternatives aims to raise up to Rs 5,000 crore via rental yield fund

November 17, 2023

BENGALURU | MUMBAI: Edelweiss Alternatives, the alternative asset arm of the Edelweiss Group, plans to raise up to ₹5,000 crore from both onshore and offshore investors through its new rental yield plus fund, said a senior company executive.

The fund will seek out and invest in quality commercial office properties in six major metros in the country. It will look to offer attractive investment opportunities, as a pre-REITs strategy, to investors eyeing rental income and capital appreciation.

The fund will primarily target markets in southern India such as Bengaluru and Hyderabad, alongside major markets like Delhi-NCR and Mumbai, with plans to build a 10-million-sq-ft portfolio within three years.

“We plan to invest between ₹400 crore to ₹2,000 crore per transaction, focusing on core office assets and older buildings with potential for value addition. There is a significant market for upgraded office spaces,” said Subahoo Chordia, president and head of real assets at Edelweiss Alternatives.

In the second phase, the fund will expand into new asset classes such as data centres and warehousing, in addition to office properties. It will focus on properties ranging from 500,000 sq ft to 1.5 million sq ft in the office segment.

“We have over a decade of experience across Indian private debt and real assets. Our strong on-ground presence enables us to source and structure unique deals. With robust asset management and operating capabilities, we actively monitor assets and proactively engage with our investee companies,” said Chordia.

The Indian market presents appealing risk-adjusted returns for private debt and real asset investors, and it is expected to grow in line with an expanding economy to reach $5 trillion by 2027.

“The evolving regulatory landscape enables more capital infusion into the Indian real estate sector, opening up substantial investment opportunities for alternative asset managers,” said Chordia.

Institutional investors are expressing strong confidence in the Indian office sector, buoyed by its promising growth prospects and resilient demand. This optimism has fuelled a surge in activity, with leading global funds finalising major deals. GIC, CapitaLand India Trust, Bain Capital, CPPIB, and PAG Credit and Markets are some of the active global investors who have spearheaded several large deals in recent years.

“Investors with patient long-term capital stand to immensely benefit from investment in alternative asset opportunities that India offers. Managed investment vehicles have emerged as the preferred option for long-term private market investments,” said Sankey Prasad, CMD, Colliers India.

According to a recent report by Colliers, the Indian office segment saw record institutional investments of $1.8 billion in the second quarter of 2023, indicating sustained investor confidence. Investments in the first half of this calendar year soared 2.5 times year-on-year to $2.7 billion, the report said.

  • Published On Nov 17, 2023 at 09:23 AM IST

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